Wednesday, March 19, 2008

Baring acquires 12% in Sharekhan

Baring Private Equity beat Merill Lynch to acquire 12% stake in Sharekhan for Rs.240 Cr.
The transaction is mixed secondary sale by Citigroup Venture Capital and additional infusion of capital.Last year, CVC along with IDFC had invested around Rs 650 crore to pick 85% stake in Sharekhan.CVC owns 75% in Sharekhan while IDFC holds 10% and the management and employees hold the remaining 15%.

Last year, CVC and IDFC together had acquired 37% equity owned by Sharekhan promoter Shripal Morakhia while 48% was acquired from other shareholders including GE, Intel Capital and some funds advised by HSBC PE India.

A private equity firm holding substantial equity stake in an unlisted company would be classified as a promoter. If that company goes public, the PE firm’s shares would have a lock-in period and cannot exit for a certain period. This could be one reason why CVC intends to dilute its stake, though it could not be verified independently (We suspect a hole in the books was discovered during due delligence and the promoter asked to make up. I would try to do some molework)

Baring earlier took exposure in the sector picking 44.8% in JRG Securities for $35 million (Rs 140 crore) about a year ago.
Go to Economic Times here

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