Mumbai, Dec. 8: Merrill Lynch is acquiring control in its Indian joint venture, DSP Merrill Lynch.

In one of the largest deals struck in the country, Merrill Lynch, one of the leading wealth management, capital markets and advisory companies in the world, will pay close to $500 million to raise its stake to 90 per cent. The company now holds 40 per cent in DSP Merrill Lynch (DSPML).

Merrill Lynch’s bigger stake in its Indian venture will help it consolidate its presence as one of the leading securities firms in India. The deal comes at a time when the equity markets in the country are on a high.

In a deal struck on Wednesday, Merrill Lynch Holdings (Mauritius), which owns 90 lakh shares or 40 per cent of the equity capital of DSP Merrill Lynch, signed a share purchase agreement with Hemendra Kothari and his affiliates.

Under the agreement, Merrill Lynch will acquire over 1.07 crore shares, representing 47.72 per cent of the company’s equity. While Merrill Lynch will also come out with an open offer subsequently, it intends to de-list the shares of DSP Merrill Lynch from the BSE. The deal is expected to close in the first half of 2006 and is subject to various regulatory approvals.

Merrill Lynch wants Hemendra Kothari to continue as chairman of DSP Merrill Lynch. He has also been asked to support Merrill Lynch’s growth plans abroad and assist Indian companies in their global endeavours as vice-chairman of Merrill Lynch International.

He will also become a member of the Merrill Lynch Asia Pacific executive management committee.

DSPML Fund Managers, a wholly-owned asset management subsidiary of DSPML, will be jointly run by DSPML, which holds 40 per cent, and Hemendra Kothari and related entities with a 60 per cent stake. This follows DSP Merrill Lynch entering into an agreement with Kothari for divestment of 60 per cent of its holding in the asset management subsidiary to Kothari and his related entities.

Merrill Lynch’s relationship with DSP began in the 1980's and grew into a joint venture in 1995. The business will continue to operate under the DSP Merrill Lynch name.

“We have tremendous confidence in Hemendra Kothari and the talented team at DSP Merrill Lynch. As a result of this change, we will be able to accelerate our plans for growth in this robust market. I am also very pleased that Hemendra has agreed to take on these additional responsibilities,” said Stan 'Neal, chairman and CEO of Merrill Lynch.

On the BSE today, the DSPML scrip opened at Rs 2074 and hit a high of Rs 2170 after the announcement. The stock closed at Rs 2062 over Wednesday’s close of Rs 1974.75.

DSPML is one of India’s leading investment banking and wealth management companies.