JM Financial Announces Separation from Morgan Stanley in the Joint Venture for Investment Banking and Securities Business

Mumbai, 22 February 2007: JM Financial today announced in principal decision to separate from Morgan Stanley in the joint venture in Investment Banking and Securities Broking business, subject to necessary regulatory and other approvals as may be required and signing of definitive agreements.

The joint venture, which was inked in 1997 and formalized in 1999, has established a pre-eminent Investment Bank as well as Equity Broking, Research, Wealth Management and Advisory and Securities Distribution operations in India during the decade long relationship.

JM Financial Group, established in 1973 and a pre-eminent Indian Investment Bank by itself prior to the joint venture with Morgan Stanley, will acquire the 49% holding of Morgan Stanley in JM Morgan Stanley Private Limited (JMMS), the investment banking company together with its subsidiaries engaged in fixed income, equity broking, wealth management, advisory and distribution businesses of the joint venture at around book value for USD 20 mn equivalent to Rs.88.5 crore at the current exchange rate. JM Financial will simultaneously sell to Morgan Stanley, their 49% holding in JM Morgan Stanley Securities Private Limited (JMSPL), the institutional equity broking company for USD 445 mn equivalent to approx. Rs.1,970 crore at the current exchange rate.

The transaction is expected to close by the first quarter of Financial Year 2007-08. JM Financial Group and Morgan Stanley have agreed that all existing mandated transactions will be executed by the current joint venture and the partners in the manner currently in practice in a seamless way keeping the clients’ interest as utmost priority.

JM Financial Group has recently ramped up their asset management business with the addition of a private equity fund and a real estate fund to the existing mutual fund business. The group has also forayed into securitized assets and special situations investing activities. Besides these, the group runs a Non Banking Financial Company and a Commodities Research and Broking business.

Commenting on this transaction, Mr. Nimesh Kampani, Chairman of JM Financial Group said, “The rapidly growing Indian economy is opening up new vistas for growth in the financial services business. The time is ripe for Indian businesses of JM Financial’s stature to build Indian institutions of global standards and reach. JM Financial is focused on expanding their area of operations and grow all businesses in a synergistic rapid pace. The separation will allow the JM Financial Group to capture these opportunities on the foundation of their Firm values of long term business focus backed by strong relationship with the clients. JM Financial Group will immediately build up their own institutional equity broking and research business. The group already has the relationships and expertise for these businesses and will enhance the infrastructure needed to add these to their current portfolio.”

Commenting on the employee strength of the group, Mr. Kampani said that post separation, JM Financial Group will have over 600 employees, including some of the best and most experienced people in the industry. He said that all businesses in the group have strong management teams led by experienced and well respected professionals. With continued focus on retention, nurturing, empowerment of talented individuals, JM Financial Group is poised to enter the new phase of growth.

Udwadia & Udeshi as well as Amarchand Mangaldas and Suresh A Shroff & Co. acted as legal advisors to JM Financial for this transaction. PP Shah & Co. acted as tax advisors to JM Financial for this transaction.

JM Financial is an integrated diversified financial services group offering a broad range of financial products and services including investment banking, securities, wealth management, investment management and equity financing to its Indian and international clients.