'If You're A Global Leader,You Would Be In India'
Swiss bank UBS has emerged as the biggest dealmaker in the Asia-Pacific region so far this year. Up to September, UBS had $659 million in investment-banking revenue, giving it an 8.8 per cent share of the market, ahead of Citigroup Inc.
Robert Rankin, who heads UBS's investment banking division in Asia and also sits on its global investment bank board, on a range of issues that confront the region and India, spoke to BW's Dinesh Narayanan and Baiju Kalesh on Indian markets and issues confronting it.
Is it a good time to be in India?
A: It's a very exciting time to be in India. This is my second trip. I spend a lot more time in China. We've got the domestic securities licence there.
Did you spend some time on the Vodafone-Hutch deal too?
A: Spent some time on Vodafone. We're very, very proud of being involved in that. I took that (the deal) as a kind of a signature transaction for India. What I mean by that is $18 billion is a huge amount of money. It shows the scale of the businesses that are being grown in India. It also shows why if you're a global leader you need to be here. And people are going to see that in other sectors as they open up. If you're a global leader it would be necessary or desirable or both to have a position in India.
How do you view the new capital controls introduced by Sebi?
A: ....whilst there's short-term noise, arguably, short-term pain for some people, directionally, I think it's definitely a move towards a more transparent, a more open Indian equity market. That's a good thing. .
What are you advising your clients? How should they approach the Indian markets?
A: … over the next 25 years they'll get really macro … if you believe that, then being in India is absolutely critical. India is a key way to play that emerging growth theme with China ... Brazil, Russia, China, India, all the BRIC countries …
...I think there's still 15-20 per cent growth to go. So in emerging markets, if you want to be in emerging markets, be in India. ... The market PE is in the low 20s. If the growth of these earnings continue to come through it's okay. It's still an okay multiple to pay with world-class companies growing at 25-30 per cent rate each year. They are reasonably attractive multiples. And certainly when you look at the penetration rates, in the mobile industry, or banks, the penetration rates are very low and support the multiples that currently exist.
Then we look at the domestic consumption stories within that. We think banks still look very attractive. We think capital goods companies-with a planned capital spend of $500 billion in the next five years-they, like L&T, look very good. The real estate companies have probably gone very high. But banks, capital goods companies, real estate companies, power companies - the whole domestic consumption story is now playing out. We think that's going to be the key theme.
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