S & P rates subcontinent highly
Sunday, 12 August 2007
Joe Lealy
IF you asked someone in which country Standard & Poor's has the most staff, few would guess India.
But in fact almost 50 per cent of the US-based credit ratings agency's global staff are there: 1,500 at local affiliate Crisil and another 2,500 at Capital IQ, a financial information research platform and database provider.
S&P's headcount is poised for further growth. The agency recently appointed R. Ravimohan, head of Crisil, as the first managing director and south Asia regional head.
Mr Ravimohan has a farreaching brief under which he is eventually expected to centralise S&P's ratings efforts for both south and south-east Asia in India.
His central tasks will be servicing companies in these markets that are raising money overseas and tapping into India's growing role as the back office hub for the global financial services industry.
"Singapore has been our hub serving India and southeast Asia for some time," says Thomas Schiller, executive managing director Asia Pacific with S&P.
However, for major markets such as India, the company prefers to do ratings work in-country. "That's why we'll be moving it here," he said.
The move is the culmination of a long foray into India by the global ratings agency, a key part of which has been its investment in Crisil.
Founded in 1987, Crisil's operations only began to take off after 1992, when the Indian government liberalised interest rates.
In 1994, when the company listed locally, it had revenue of Rs100m. By the fiscal year that just ended in March, that figure had grown to Rs3.0bn ($74m).
S&P formed an alliance with Crisil in 1996. In 2005, S&P increased this to a controlling interest and today, together with its global parent, McGraw-Hill, holds a combined 51.63 per cent stake.
S&P further expanded its presence in India through its 2004 acquisition of Capital IQ, a New York-based company with a large backoffice operation in the subcontinent.
S&P and Crisil presently divide up work by having the global group take care of cross-border business, while the Indian affiliate services the domestic industry.
S&P rates about 30 Indian entities, while Crisil rates about 500. Mr Ravimohan says that with the increasing move by Indian companies to raise capital overseas, he expects more of this domestic client base to require the services of a global ratings agency.
"I don't see why most of these 500 should not be accessing global markets in the future. But that's the prediction. How much will happen and by when is something we'll have to see," Mr Ravimohan says.
S&P has had just a handful of its own ratings staff in India, but Mr Schiller said there was no reason to doubt headcount there would approach the levels of the agency's other branches in Asia, such as Japan and Australia, which each employ about 150 people.
The other focus for Mr Ravimohan as he builds up the south Asian operations of S&P will be to see how he can tap into India's growing role as the business process outsourcing centre for the global financial services industry.
Increasingly, the world's largest investment houses are setting up centres in India, putting 500-600 people in place at a time.
"In almost all respects, India is becoming a very important component of every major financial player," Mr Ravimohan says.
"Over time I can see that we will build an analytical team not only to support the cross-border business out of India.
"It is going to be a major operation, both because India is a big market and because India is a big resource for global operations."
On the domestic front, India already ranks alongside Australia as the second largest revenue contributors in the Asia-Pacific after Japan.
Crisil's contribution is expected to increase, with the Reserve Bank of India, the central bank, introducing requirements for all loans more than Rs100m to be rated by 2009 in line with Basel 11 norms. Crisil believes there are roughly 8,000-12,000 borrowers with credits of this size.
"It's a very rough estimate. There are no precise numbers available," says Roopa Kudva, who is taking over from Mr Ravimohan as managing director of Crisil.
Crisil is also working on other initiatives, such as a retail credit information bureau and a new system to grade the quality of domestic initial public offerings.
Still, the ratings business in India faces challenges. India's economy, while booming, has yet to give rise to a deep corporate bond market, which is a must if the domestic ratings industry is to grow at full steam.
S&P is also facing increasing competition from its arch-rival Moody's Investors Service, which has its own affiliate in India, ICRA, and is also beefing up its presence. Fitch Ratings is also firmly established in the country.
Then there is the mayhem in global credit markets, which is likely to act as a brake on Indian cross-border issuance and is a reminder of the old investment adage: past performance is no indicator of future performance.
But as far as S&P is concerned, there is no turning back. It has placed its bet firmly on India.
.........................................
— FT Syndication Service
IF you asked someone in which country Standard & Poor's has the most staff, few would guess India.
But in fact almost 50 per cent of the US-based credit ratings agency's global staff are there: 1,500 at local affiliate Crisil and another 2,500 at Capital IQ, a financial information research platform and database provider.
S&P's headcount is poised for further growth. The agency recently appointed R. Ravimohan, head of Crisil, as the first managing director and south Asia regional head.
Mr Ravimohan has a farreaching brief under which he is eventually expected to centralise S&P's ratings efforts for both south and south-east Asia in India.
His central tasks will be servicing companies in these markets that are raising money overseas and tapping into India's growing role as the back office hub for the global financial services industry.
"Singapore has been our hub serving India and southeast Asia for some time," says Thomas Schiller, executive managing director Asia Pacific with S&P.
However, for major markets such as India, the company prefers to do ratings work in-country. "That's why we'll be moving it here," he said.
The move is the culmination of a long foray into India by the global ratings agency, a key part of which has been its investment in Crisil.
Founded in 1987, Crisil's operations only began to take off after 1992, when the Indian government liberalised interest rates.
In 1994, when the company listed locally, it had revenue of Rs100m. By the fiscal year that just ended in March, that figure had grown to Rs3.0bn ($74m).
S&P formed an alliance with Crisil in 1996. In 2005, S&P increased this to a controlling interest and today, together with its global parent, McGraw-Hill, holds a combined 51.63 per cent stake.
S&P further expanded its presence in India through its 2004 acquisition of Capital IQ, a New York-based company with a large backoffice operation in the subcontinent.
S&P and Crisil presently divide up work by having the global group take care of cross-border business, while the Indian affiliate services the domestic industry.
S&P rates about 30 Indian entities, while Crisil rates about 500. Mr Ravimohan says that with the increasing move by Indian companies to raise capital overseas, he expects more of this domestic client base to require the services of a global ratings agency.
"I don't see why most of these 500 should not be accessing global markets in the future. But that's the prediction. How much will happen and by when is something we'll have to see," Mr Ravimohan says.
S&P has had just a handful of its own ratings staff in India, but Mr Schiller said there was no reason to doubt headcount there would approach the levels of the agency's other branches in Asia, such as Japan and Australia, which each employ about 150 people.
The other focus for Mr Ravimohan as he builds up the south Asian operations of S&P will be to see how he can tap into India's growing role as the business process outsourcing centre for the global financial services industry.
Increasingly, the world's largest investment houses are setting up centres in India, putting 500-600 people in place at a time.
"In almost all respects, India is becoming a very important component of every major financial player," Mr Ravimohan says.
"Over time I can see that we will build an analytical team not only to support the cross-border business out of India.
"It is going to be a major operation, both because India is a big market and because India is a big resource for global operations."
On the domestic front, India already ranks alongside Australia as the second largest revenue contributors in the Asia-Pacific after Japan.
Crisil's contribution is expected to increase, with the Reserve Bank of India, the central bank, introducing requirements for all loans more than Rs100m to be rated by 2009 in line with Basel 11 norms. Crisil believes there are roughly 8,000-12,000 borrowers with credits of this size.
"It's a very rough estimate. There are no precise numbers available," says Roopa Kudva, who is taking over from Mr Ravimohan as managing director of Crisil.
Crisil is also working on other initiatives, such as a retail credit information bureau and a new system to grade the quality of domestic initial public offerings.
Still, the ratings business in India faces challenges. India's economy, while booming, has yet to give rise to a deep corporate bond market, which is a must if the domestic ratings industry is to grow at full steam.
S&P is also facing increasing competition from its arch-rival Moody's Investors Service, which has its own affiliate in India, ICRA, and is also beefing up its presence. Fitch Ratings is also firmly established in the country.
Then there is the mayhem in global credit markets, which is likely to act as a brake on Indian cross-border issuance and is a reminder of the old investment adage: past performance is no indicator of future performance.
But as far as S&P is concerned, there is no turning back. It has placed its bet firmly on India.
.........................................
— FT Syndication Service