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

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.

Sharekhan to raise funds for expansion

Sharekhan is planning to raise funding for its aggressive expansion plans. Sharekhan is the retail broking arm of Mumbai-based financial services group SSKI. The company has held discussions with investment banks for raising resources. These may be in the form of an initial public offering, private placement, debt or a combination of all of these.

As earlier reported in the media, the promoters of the firm, the Morakhia family, also the single largest shareholder in the company, are not planning to quit the firm as yet. Private equity firm General Atlantic had invested about Rs. 144 crores ($31 mn) in April 2006 in the company through a combination of primary investment in the company and secondary investment through buying out the entire shareholding of First Carlyle Ventures. The other investors in the retail and online brokerage outfit are Intel Capital and a group of funds advised by HSBC Private Equity India.

Sharekhan is among the top five retail brokerage outfits in the country with over 100 branches across 150 cities. The investment banking and the institutional brokerage outfit of the group, SSKI has no fund raising plans.

Read the Business Standard article.