Thursday, April 12, 2007

Sharekhan to sell stake to private equity players

Sharekhan, the retail broking arm of the Mumbai-based SSKI Group, is raising funds from private equity players to finance its expansion. A few private equity players have already started due diligence on Sharekhan. However, there seem to be conflicting reports as to how much stake will be diluted.

As per Business Standard reports, the retail brokerage company may dilute close to 15% stake, as per Shripal Morakhia, promoter of Sharekhan. This will result in a dilution of stakes of all existing shareholders. The company is not disclosing the amount it is planning to raise. At present, the Morakhias hold 37% stake in Sharekhan, while its employees hold 15% and the rest is held by General Atlantic, Intel Capital and a group of funds advised by HSBC Private Equity India. In April 2006, General Atlantic invested about Rs. 144 crores ($31 mn) in the company through a combination of primary and secondary investments through buying out the entire shareholding of First Carlyle Ventures. Sharekhan is looking at expanding its presence in the country through organic growth. It is among the top five retail brokerage outfits in the country with over 100 branches across 150 cities.

Meanwhile, The Economic Times says that the promoters of Sharekhan are looking to dilute a majority stake (around 51%) to a strategic investor. The company is valued at around Rs. 750-850 crores and a 51% stake will be valued at Rs. 375-425 crores. The company is said to be in talks with a few investors and is considering all options including selling a majority stake to an investor or selling the entire company, according to Sharekhan CEO Tarun Shah. It is being said that Credit Suisse is one of the interested parties.

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