Lehman likely to tie up with I-Sec soon

Global investment bank Lehman Brothers is in talks with ICICI Securities, the investment banking arm of ICICI Bank, for a possible alliance.

Sources close to the development said, to start with, the two players would work jointly on individual deals and might explore the possibility of an equity tie-up at a later stage.

I-Sec executives declined to comment. But the sources said I-Sec had been talking with the $71-billion investment bank for over six months now and that, it might sign an agreement soon.

Senior Lehman Brothers executives were in Mumbai last week for another round of discussions. Once the arrangement is in place, I-Sec and Lehman Brothers will explore business opportunities jointly in India and overseas.

They will together put up bids for mergers and acquisitions. The sources added that Lehman Brothers was looking at possible business opportunities in capital-raising, mergers and acquisitions, and structured financial products for the Indian market.

I-Sec, on the other hand, will gain greater access to international markets for playing a prominent role in overseas loan syndication business, merger and acquisitions, and capital-raising through equity for Indian clients. I-Sec will also leverage the expertise of Lehman Brothers in innovative financial products and structured deals.

The tie-up will pave the way for the re-entry of Lehman Brothers into the Indian financial market. It had a small investment banking operation earlier, which was closed down a few years back.

Set up in 1993, I-Sec was originally a 50:50 joint venture between the erstwhile ICICI and JP Morgan. In 1998, ICICI severed ties with JP Morgan, which set up its own shop in India.

Since then, I-Sec is one of the few mainline Indian investment banks which do not have a foreign partner. It has, however, global footprints through its offices in New York, London and Singapore.

Apart from investment banking, I-Sec also deals with government securities through its primary dealership business. It has played a very aggressive role in the government's divestment programme by lead managing some of the PSU public floats. On the M&A front, it has recently worked on the UB group recast and ACC's refractory unit sale.

Lehman Brothers globally maintains leadership positions in equity and fixed income sales, trading and research, investment banking, private investment management, asset management and private equity.