India Infoline Ltd. (IIFL), a brokerage backed by Carlyle Group LP, is shutting its securities operations in Singapore and eliminating about 11 positions, according to two people with direct knowledge of the matter.
The brokerage, based in Mumbai, plans to keep its wealth and asset management operations in Singapore, the people said, declining to be identified as the matter is confidential. India Infoline has applied for a temporary suspension of its trading activities on the Singapore exchange, spokeswoman Poonam Saraogi said today.
Banks and brokerages in Asia Pacific are joining global rivals that have cut more than 200,000 jobs since the beginning of 2011 as Europe’s debt crisis triggers a slowdown in the region. Japan’s Daiwa Securities Group Inc., South Korea’s Samsung Securities Co. and Australia’s Macquarie Group Ltd. are among firms that are reducing staff this year.
“Call it the European contagion, U.S. effect, Asian effect, people want to cut down costs because the amount clients pay for trading is simply shrinking,” said Arun Kejriwal, a director at Mumbai-based investment advisory company Kejriwal Research & Investment Services. “Brokerage as a business seems to be at the receiving end.”
India Infoline is curbing operations in Singapore even as it plans to double investment banking staff in India, according to Chairman Nirmal Jain, to tap demand for managing equity sales. Former Nomura Holdings Inc. banker Nipun Goel was named president of its investment bank, the brokerage said in a statement today.
Offered New Assignments
Three of the 11 people whose jobs are being eliminated were offered the option of taking new assignments within the company, one of the people said.
The brokerage is “downscaling” the Singapore office, Saraogi, who is based in Mumbai, said by telephone, without confirming the number of jobs cut.
“We are undergoing a restructuring there,” she said, citing lower-than-expected trading volumes in Singapore. The company, which had won the trading license in mid-2010, will continue offering research on China from the city-state and focus on its wealth management business from there, she said.
Shares of India Infoline gained 4.5 percent to 68.80 rupees as of 12:19 p.m. in Mumbai trading today. The stock has gained 58 percent since the end of last year, while the BSE India Sensitive Index, or Sensex, has advanced 13 percent.
‘Quick to React’
Jain’s attempt to expand the brokerage’s operations into Singapore has “backfired,” said Kejriwal.
Still, “you can’t criticize the guy for making the attempt,” he said. “If at all, you can compliment him for being quick to react” to the losses and withdrawing, he said.
Carlyle in October said its private equity unit in Asia had accumulated a 9 percent stake in the brokerage, without disclosing how much it had paid. The Washington-based buyout firm has made equity commitments of more than $2 billion in the region, it said. The holding in the Indian brokerage was valued at 1.71 billion rupees ($34 million) based on its March 7 closing price, according to data compiled by Bloomberg.
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