It was the sher khan of retail broking but now ShareKhan is all set to change hands. NDTV has learnt that Citi's venture capital arm CVC may pick up majority stake in Sharekhan and the deal might be announced in the next 48 hours.
Even though management has declined to comment, it did admit that Citi is a top contender and an announcement on the buyer will be made by Thursday.
“This was on the cards, it was being talked about for a while that we are looking at raising funds to the tune of Rs 150-200 crore. I think one of the parties that we have discussed is Citi, TPG or Bearings. Mostly one of these guys will be able to take the stake in the company,” said Hemang Jani, AVP, Sharekhan.
The valuation is expected to be Rs 330-350 crore for 51 per cent stake which includes the promoters stake of 37 per cent. A primary issue for the balance 14 per cent would give control for the buyer.
PE investors
Employees will also have an option to sell their 15 per cent. Private equity investors Intel, General Atlantic Partner and HSBC have not yet committed to sell.
JM Financial, the only Indian player who made it this far, has now pulled out. The top three contenders were Citi, Texas Pacific and Barings.
It is not surprising that there has been no firm desire from private equity investors to sell given that the retail brokerage business in India is just taking off and there are not too many that are up for sale. Sharekhan also features amongst the top three in retail broking business.
This deal will come on the back of Stanchart buying into UTI securities and a whole host of private equity deals over the last few months. It is clear that foreign players are using their deep pockets to jump into the retail brokerage boom, without wanting to waste any time setting up the shop.
Source : NDTV