Macquarie Securities Group: Part FII Gains now as FDI !?

 

Glanced at an article in today’s Economic Times where the Macquarie Group has disclosed that it had invested  US $ 200 million in Indian operations.It is Increasing Headcount and is already in the top five Institutional Brokerage Houses in India 

Could not help wondering if such Investments could be viewed as Monies being reinvested from part of Huge Profits (in all probability totally tax free) in Equity Investments in our Secondary Markets in India on Mumbai Stock Exchanges made by Macquarie as a Foreign Instituitional Investor (FII) registered with SEBI

Have a look at the four FII registrations of Macquarie with SEBI as of date

Macquarie Group Registrations as FIIs with SEBI in India till date

Sr No

Entity

Place

Date of Registration

Sensex Close on Day of Registration

Sensex Surge from Date of Reg

1

Macquarie Bank Ltd

NSW,Australia

Jan 20,2005

6183

140 %

2

Macquarie Investment Management Ltd

NSW,Australia

Apr 12,2006

11356

31 %

3

Macquarie IMM Investment Co Ltd

Seoul,South Korea

Feb 14,2007

14010

6 %

4

Macquarie Capital Investment Management LLC

New York,USA

Mar 13,2008

15357

(3 %)

Sensex is 14852 at 2 pm now on Thursday,August 14,2008

Macquarie entered India in 2005 as a FII and has registered a seperate FII every single Year since then

Clearly Macquarie should have had a great run as a FII in 2005 rolling into 2006 and 2007 too…If FIIs brought in @ US 35 $ Billion in 2005-2007 Period as an Active and Aggressive Investor Macquarie too would have had a sound share of this Quantum and it’s Gains (Probably Tax Free) from Investments in Indian Equities would have easily crossed half a billion dollars …possibly over a Billion

So in a sense it’s made Huge Tax Free Gains in India as an Equity Investor and is re-routing back only a small  part of such Gains into Indian Operations as a Broker,Wealth Manager and a Non Banking Finance Company…all within a space of three to four years

Can you look at it this way ?…India is welcoming it’s Own Money in as Foreign Direct Investment (FDI) !

Draw a parallel…Indian Promoters of Companies declare Huge Tax Exempt (In their Hands) Dividends and re-route the same back into the Company as  Preferential Equity allotment to Promoters at Low Price and increase their stake too in the process

Kya Baat Hai !

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