The global financial system was shaken to its core on Monday when Lehman Brothers filed for bankruptcy protection and Merrill Lynch agreed to be sold to Bank of America.
Firms, which have Lehman as investors think the foreign bank, may sell its stake. But Indian companies in which Merrill Lynch is an investor are not bothered. The promoter of one infotech firm, in which Lehman Brothers holds about 3 percent, confirmed that Lehman had spoken to him about a stake sale. “So far, they haven’t sold their stake. They will get back to us in 48 hours. The company has the resources to buy back its stake,” he said.
In addition, he said Lehman Brothers had also subscribed to the firm’s FCCBs that could scale up its stake. The FCCBs are due for conversion in 2012. “We are working on it. There is no mention of whether the bond would devolve in such instances. This kind of situation has never happened before,” he added.
Lehman Brothers could consider a stake sale in some of the 17 Indian firms it has investments in, analysts said. Spice Mobile, Edelweiss Capital and KPIT Cummins Infosystems are some of the firms in which it holds stake. KPIT was also one of the firms in which Bear Stearns held a stake. The company’s officials were not available to comment.
Industry sources, however, do not feel that BoA will sell Merrill’s stake in various companies. “I don’t think BoA is going to do this as it bought Merrill to supplement its investment banking venture,” an industry analyst said.
Source – Economic Times
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