MUMBAI Morgan Stanley's (MS.N) India head expects share sales in the country to surge as companies seek to expand, and said Indian companies are poised to resume global acquisitions helped by the rupee's strength and low valuations.
Indian companies could raise roughly $70 billion through share sales over the next three years, provided markets remain strong, Narayan Ramachandran, who has been with Morgan Stanley since 1996, told the Reuters India Investment Summit.
He also said talk of looming asset bubbles in India was "hogwash."
"Credit growth, for the first time in India, is under depositary growth, which is why there's no bubble," Ramachandran, who has 20 years of investment experience, said at Reuters' office in Mumbai.
"People don't even know how to use the word bubble anymore."
He also said the time was right for Morgan Stanley's global real estate and infrastructure funds to invest in India.
"If you take a 20-year view, it will be a mega-bull-market run in real estate in India. We have to rebuild the entire real estate stock in the country," Ramachandran said.
Morgan Stanley has invested $700 million in Indian real estate, and is looking at residential and special-use developments, he said.
Morgan Stanley separated from its former India joint venture partner JM Financial (JMSH.BO) in 2007, and has gone on to build a full-service investment bank, with sales and trading, fixed income, commodities, derivatives, research and asset management offerings and 400 employees in its onshore business.
Indian companies have raised $18 billion by selling new shares this year, and a long list of firms are queuing up with IPOs and secondary offerings in Asia's third-largest economy.
By contrast, they raised $7.1 billion in all of 2008.
Morgan Stanley, which did not figure in the top 10 of the Thomson Reuters equity capital markets league table for India in 2008, tops it this year with a market share of 18.2 percent.
Ramachandran expects Indian firms to sell between $20 billion and $40 billion in equity a year for the next three years, with stake sales in state-run firms to total $10-$15 billion.
Offerings from energy and infrastructure firms would continue, and telecoms firms were set to tap capital markets to finance billions of dollars needed to build-out third-generation mobile networks in the country.
The first life insurance companies are also widely expected to begin going public in 2010.
Phone companies are expected by analysts to shell out $1.5 billion on 3G spectrum alone. Building the high-speed wireless networks will cost billions of dollars more.
"I would think we will raise far more in infrastructure, and other sectors of the economy next year in India, but as an actionable theme, this is live, it's big, it's now," he said of 3G.
"The insurance theme will come, probably the next mega-capital raising event," he said.
A strengthening rupee and lower valuations overseas will drive a new wave of foreign acquisitions, Ramachandran said.
"The combination of your currency got better and their asset valuations are cheaper, combined with a new tendency of reverse imperialism, makes for outbound M&A," Ramachandran said.
After a strong 2007, when Tata Steel (TISC.BO) bought Anglo Dutch steel maker Corus for $13 billion, once-acquisitive Indian companies had mostly gone quiet as the global crisis crippled access to funding.
But with a thaw in credit markets, Indian companies are once again looking to make big overseas deals.
Energy major Reliance Industries (RELI.BO) has announced an offer to buy a majority stake in bankrupt Luxembourg-based petrochemicals maker LyondellBasell ACCEIN.UL in a deal valued by sources at between $10 and $12 billion.
India's Essar Oil Ltd (ESRO.BO), meanwhile, is in exclusive talks with Royal Dutch Shell Plc (RDSa.L) on the sale of three European refineries, which media reports have valued at 1-1.5 billion pounds ($1.7-$2.5 billion).
The Indian rupee has strengthened more than 5 percent against the dollar so far this year, helped by strong inflows as funds bet on India as an emerging market.
(Reporting by Narayanan Somasundaram and Pratish Narayanan; Editing by John Mair)