JP Morgan pulls out of I-Sec

A number of top level changes are set to take place after the pullout. According to sources, managing director, Kishor Chauker, will be replaced from someone in ICICI. The deputy managing director Andrew MacCormack and JP Morgan nominee, is likely to be replaced by Ananda Mukherjee, head of the infrastructure division in ICICI.

Immediately after the board meeting, the top brass in I-Sec went into a series of internal meetings to take stock of the situation.

The meeting was attended by PeterWoicke (head of Asia Pacific, JP Morgan), Edmund Sutton (president, JP Morgan International Finance Corporation) and Andrew MacCormack among others. ICICI deputy MD and nominee in the I-Sec board Lalitha Gupte was also present along with Chauker. ICICI officials said that JP Morgan decided to pull out of I-Sec because it wants to bring down its exposure in Asia. "We have benefitted enourmously from JP Morgan," I-Sec sources said. JP Morgan had earlier pulled out of the asset managment joint venture with ICICI.

The modalities to facilitate ICICI buying back of Morgan’s stake will be finalised in next three to four days, ICICI officials said. Going by the MoU JV after five years of operations and the term lending institution reserves the first right of refusal to buy-out its (JP Morgan’s) stake.

I-Sec has an equity base of Rs 203 crore.JP Morgan is holding 39.64 per cent stake through Morgan Guarantee International Finance Corporation in I-Sec. The remaining stake of 60.36 per cent is held by ICICI andemployees.

I-Sec had posted a half yearly profit of Rs 36 crore on a total income of Rs 115 crore during 1997-98. The company earned an operating profit of Rs 15.68 crore from its operations on a total income of Rs 127 crore. There has been loss to the tune of Rs 65.90 crore, after treating the securities portfolio as stock in trade and valuing the same at lower of cost or market price and provisioning against NPAs.

While the ICICI took new equity positions of only Rs 2.22 crore on account of discharge of underwriting commitments during the year, the total erosion in the value of the equities portfolio, including that in outstanding position at the begining of the year amounted to Rs 67.81 crore.