Spending a month in Mumbai, India, will change your perspective on the world. Dave Rosedahl, an attorney at the Minneapolis-based law firm Briggs and Morgan, a former chief regulatory officer for the Pacific Stock Exchange, and former longtime general counsel at the brokerage house of Piper Jaffray in Minneapolis, imported a full load of business insight after his trip there in February. Rosedahl was in Mumbai for a project sponsored by the U.S. Agency for International Development (USAID). Rosedahl’s focused on improving protections for investors and the regulation of investment advisors in the burgeoning capital markets of India.
We spoke with Rosedahl about what he learned regarding the relationships between the stock and investment banking markets in India, as well as their importance to the Minnesota economy.
Why were you in
Mumbai?
Mumbai is one of the biggest cities in the world—it has a population exceeding 16 million people. It is the financial capital of India. The Reserve Bank of India, securities markets, capital markets, regulators—all are in Mumbai. I participated in a USAID capital-markets consulting project, advising India’s Ministry of Finance [on investor protections and investment advisor regulations].
What are India’s markets
like?
There are 22 stock exchanges in India—all demutualized, not member-owned and controlled. The country, which has 1.1 billion people, is not heavily regulated with respect to the capital and securities markets, and especially brokers. From about 2000 to 2001, India went through the same dot-com experience that we did. They refer to companies that disappeared overnight during that time period as ‘vanishing companies.’ The dot-com experience has lived on in the minds of many Indian retail investors who think, ‘If I have a problem, where do I go to get that problem addressed? What if my broker disappears? What if I can’t get a dividend payment?’ In our system, I count on my broker to have good books and records, and to be responsive.
Should Minnesota
businesses be worried?
Yes and no. I’m a free market guy, so whatever the competition is, it is. [The markets] will constantly be pushed by technology, but Minnesota can compete. While I was there, I saw a headline article on International Decision Systems, a Minneapolis-based provider of financial software and services, which had just struck a deal to provide software and hardware to Indian companies. It’s an example of how our technology is advancing there.
What sorts of things are Minnesota companies doing in India?
3M, Medtronic, and Target all have a strong presence. Target has offices in India for buying products that are imported here. While I was in Mumbai, the International Decision Systems transaction was announced, and Best Buy was negotiating to find a retail consumer electronics partner.
Should
individuals be hesitant to invest directly into Indian companies?
Yes, I would be very careful about individual investing. The marketplace is very volatile. The markets, as I’ve said, are good markets, but they are not deep, highly liquid markets, and that enhances the volatility factor. Certain companies over there are very strong—those that are well regarded nationally and internationally. Those would be the type of companies in which I would invest.
What do Indian companies want from Minnesota companies?
Indian companies produce products for the global economy and are most interested in trading with Minnesota-based entities possessing manufacturing capabilities and access to natural resources. They, in turn, have the technology and skills for extracting our resources more economically. One of their companies, a wind energy developer, has its turbo blades made in Pipestone. The model for launching into business in India has been to partner with a local firm. This is true for many industries. Partnerships become the ticket for gaining approval from local government. They allow you to come in and own a percentage of the company.
What can the governor do
to promote trade with India?
The more that people from Minnesota are exposed to India’s citizens and its capital markets, the greater the opportunities will be. Take, for instance, Essar Global’s recently announced purchase of Minnesota Steel. Not just an incredible project to benefit northeastern Minnesota, this shows a strong partnership between private interests and government that could not happen without the cooperation of the State of Minnesota and Itasca County.
