September 2008
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Lehman fall may deepen Indian realtors' credit woes

Lehman Brothers’ bankruptcy is likely to cost Indian real estate dear. It may impact the financial major’s existing investments worth $500 million in realty firms, including DLF and Unitech, besides drying up another $500-million worth of potential investment which was expected to flow into Unitech’s Mumbai projects. The news of Lehman’s collapse brought the BSE realty index down by 7.65% on Monday, while the benchmark Sensex declined 3.35%. Both DLF and Unitech fell 7.5%. Lehman’s fall signals a deepening of credit crisis for Indian developers, who have lately been battling falling sales, rising cost of construction and tightening credit. It is expected that the US-based firm is likely to go for a fire sale of its assets. Lehman invested $200 million in DLF promoter group company DLF Assets last year and bought 50% stake in Unitech’s Mumbai project for $175 million a few months ago. It had also invested $80 million in Bangalore-based SEZ Gandhi City and was likely to hike its share to $300 million. […]

BoA-Merrill may flex its muscles

The acquisition of Merrill Lynch by Bank of America (BoA) could well lead to the combined entity emerging as a formidable force in India. Even as the deal is likely to be complimentary, the merger of operations would also lead to an overlap in the debt market and the primary dealership (PD) business. There is a sense of uncertainty among some of the senior staff in DSP ML — the Indian arm of Merrill regarding the impact of the merger in India. From DSP Merrill Lynch’s (DSPML) perspective, the acquisition would mean gaining a banking platform. In India, DSPML is a bigger player than BoA. ML has also been looking at obtaining a banking licence in the country. […]

Kothari may sell his 10% holding

The ripples created by the sale of Merrill Lynch to Bank of America could extend well beyond the possible restructuring of the financial services firm’s operations in India. For at stake is also the residual shareholding of 10% held by DSP Merrill Lynch chairman Hemendra Kothari in the Indian arm. Sources close to Mr Kothari, one of the most visible faces of investment banking in India, told ET that he was likely to exit from this investment. In late 2005, Mr Kothari sold his 50% holding to Merrill Lynch for $500 mn. Following that transaction, he was left with a 10% stake. The aim then was to delist the DSP Merrill Lynch stock. […]