Wirehouse to take control of DSP Merrill Lynch; delisting planned. Merrill Lynch plans to take control of India’s DSP Merrill Lynch. The New York-based wirehouse will pay around $500 million to increase its 40% ownership of the Mumbai-based brokerage house to as much as 90%. Merrill says the bigger stake will help it stay the course as a leading securities firm in India – a country whose growing affluence is attracting interest from other global players as well.

Merrill will make an offer for the publicly traded shares of DSP Merrill Lynch and then apply to have the company delisted from the Bombay Stock Exchange. DSPML Fund Managers, a wholly-owned asset management subsidiary of DSP Merrill Lynch, will continue to be operated as a joint venture with DSPML owning 40% of it, and DSP Merrill Lynch chairman Hemendra Kothari and “related entities” controlling the remainder.

Kothari will stay on as chairman of DSP Merrill Lynch after the transaction, become a vice chairman of London-based Merrill Lynch International and take a seat on Merrill’s Asia-Pacific executive management committee.

Tremendous confidence

“We have tremendous confidence in Hemendra Kothari and the talented team at DSP Merrill Lynch,” Merrill CEO Stan O'Neal says in a press release. “As a result of this change we will be able to accelerate our plans for growth in this robust market.”

Citing Merril’s “global distribution network, product capabilities, client franchise, infrastructure, and highly regarded brand,” Kothari describes Merrill as “an excellent partner for DSP over the last 20 years.”

DSP Merrill Lynch was known as DSP Financial Consultants Limited before it linked up with Merrill in the mid 1980s. It was founded in 1975.

Merrill’s move on DSP reflects a growing interest in India. A few months ago France’s BNP Paribas Asset Management (BNP PAM) said it planned to buy 49.9% of Indian fund manager Sundaram Asset Management, a subsidiary of Mumbai-based Sundaram Finance. Late in 2004 Societe Generale, another French firm, paid $36 million for 37% of SBI Funds Management.

Private wealth in India increased 123% to $177 billion in the five years through 2003, according to Datamonitor, a London-based research firm. Two thirds of that – about $116 billion – was in the hands of 620,000 “mass affluent” and high-net-worth individuals. (In India mass-affluent individuals have investable assets of between $50,000 and $299,000; high-net-worth individuals have at least $300,000 to invest.) Datamonitor sees that population growing to just short of 1 million by 2008, by which time their collective assets will have increased nearly twofold to something in the neighborhood of $200 billion. –FWR

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