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HONG KONG, Feb 24 (Reuters) With India's soaring markets luring the world's investment banks in an increasingly ferocious battle for business, top global financial firm Citigroup figures it's best to serve a broad client base.

The U.S.-based giant, which unlike some Wall Street foes has taken a go-it-alone approach in India, last year began an aggressive expansion of its investment banking business in the country, snapping up bankers and analysts and snaring a veteran from a rival to head its equity capital markets unit.

India has become the third-biggest market for investment banks in non-Japan Asia, behind China and South Korea, with fees last year more than doubling to $381 million.

Besides traditional investment banking activities such as bond issues and IPOs, Citigroup is looking to commodities, distressed assets and venture lending as growth areas in booming India, said Sanjay Nayar, who heads Citigroup's corporate and investment banking business in the Indian subcontinent.

''We have significantly deepened our corporate and investment banking coverage and the next step is the emerging client base, which is largely entrepreneurial,'' Nayar told Reuters.

Last year, Citigroup was second behind DSP Merrill Lynch in investment banking revenue in India, generating fees estimated at nearly $38 million for market share of almost 10 per cent, according to data firm Dealogic.

Its courtship of small and mid-sized customers is evident in the comparatively high number of transactions it closed -- 70, compared with 44 for Merrill Lynch's Indian venture. Only local player ICICI closed more deals, 78, among the top 10 investment banking fee generators.

''We're beginning to look and feel like a local house, when that is what our clients need, while we are already a well-established international house in India,'' said Nayar, who is Citigroup's chief country officer in India.

MULTIPLE FRONTS, MANY FOES Serving clients across product segments means Citigroup must battle for business against local and global foes, including the Indian joint ventures of Wall Street titans.

Merrill Lynch last year agreed to pay $500 million for control of its local joint venture. Rival Morgan Stanley operates two ventures with JM Financial Ltd. and Goldman Sachs shares brokerage and investment banking ventures with Kotak Mahindra Bank Ltd.

And competition is intensifying.

Credit Suisse is ramping up its Indian business and relaunching its brokerage arm which had been dormant since 2001. Macquarie Bank is starting up in India, while Barclays has bulked up its operations in the country and Lehman Brothers is also keen to tap the market.

Fees on India deals have been notoriously cut-throat in the past two years as banks chase market share, but Nayar said they have bottomed out in the past three months.

''A lot of banks are now entering the Indian market and are competing on fees,'' he said.

The crowded market is exemplified by the follow-on equity sale by Union Bank of India that is currently in the market. Worth just $110 million, the offering is handled by five banks, including Citigroup.

''We are very clear as to what level we will do the business because we think we bring a lot more value to our clients. Just executing a deal is one thing, but the follow-through to that is equally critical,'' he said.

Citigroup is off to a vigorous start in 2006, underwriting deals worth over $1 billion, headlined by the $400 million convertible bond by drug maker Ranbaxy Laboratories The Ranbaxy deal, also sponsored by Deutsche Bank, Morgan Stanley and UBS, was the latest in a spate of convertible issues in India and was said in the market to have been just a break-even transaction for its underwriters.

Banks are willing to do such deals in the hope of more lucrative future business from big and active clients such as Ranbaxy.

''We allocate capital to our highest growth opportunities,'' Nayar said.

REUTERS SD PM1543

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