VCCircle

Just heard on CNBC TV18 channel. JM Morgan Stanley is going the Kotak Mahindra-Goldman Sachs and DSP-Merrill Lynch way. JM Financial and Morgan Stanley are splitting. JM will sell its institutional brokerage business to Morgan Stanley for $445 million. JM will build its own broking business. On the other hand, JM will retain the investment banking business.

This was expected. There were rumours of JM and Morgan Stanley going separate ways.

Earlier Kotak Mahindra had bought the stake of Goldman Sachs from the Indian joint venture. Similarly, DSP had sold its stake to Merrill Lynch last year.

Update: I just listened to a CNBC interview with Nimesh Kampani, chairman of JM Financial. Excerpts.

-JM Financial will buy the investment banking arm at book value of $20 million. So JM Financial will be the 100 per cent owner of the investment banking business, while Morgan Stanley will be free to build on its own afresh.

-JM Financial has sold its 49 per cent stake in the broking business to Morgan Stanley for $445 million. This values the broking business at roughly $900 million. Now JM Financial will be free to build a broking business on its own.

-Both the parties will not poach each other's staff.

-There is no non-compete agreement, so both the parties will be able to compete in any business they want right away.

-JM Financial will start building a broking business, while Morgan Stanley will apply for a investment and merchant banking licence.

-JM is left with $425 million, which it will use to build broking business, wealth management and other businesses in the financial services area.