The rally on the Indian bourses is stoking strong interest among private equity (PE) funds in brokerages and financial services firms.
Domestic brokerages, a majority of whom have been traditionally family-owned ventures, are also showing willingness to infuse PE funding to spread their reach.
This is primarily to counter increasing competition from new foreign entrants and also to leverage the global stock market expertise brought in by PE biggies.
Among the latest in a string of deals, ICICI Venture Funds Management and Baring Private Equity Asia are slated to invest $44 million in Hyderabad-based Karvy Stock Broking Ltd.
US-based PE fund Balyasny Asset Management marked its first exposure to the Indian financial services space by investing $10 million in Prabhudas Lilladher Advisory Services — the holding company of brokerage firm Prabhudas Lilladher — for a three per cent stake.
Among other recent deals, Singapore-based private investment firm Orient Global picked up a 22.5 per cent stake in India Infoline Investment Services for $76.7 million, while World Bank’s private sector lending arm, International Finance Corporation, is in the process of picking up an 18 per cent stake in Angel Infin Pvt Ltd, the parent company of Angel Broking, according to industry players.
Earlier, Citigroup’s private equity arm, Citigroup Venture Capital International, picked up a 19.97 per cent stake in Anand Rathi Securities, while Motilal Oswal Financial Services sold 9.48 per cent stake to private equity venture, New Vernon Private Equity Ltd and Bessemer Venture Partners.
PE major General Atlantic had also invested about Rs 144 crore in retail brokerage firm Sharekhan. With a number of brokerages going for listing of late, PE investments have come in as pre-IPO deals.
According to PE players, home-grown brokerage firms are in expansion mode as several foreign competitors are eyeing the booming equity broking business in India.
While BNP Paribas, US online brokering firm E*Trade and BankMuscat are among global financial services majors that have already entered the Indian broking market through strategic tie-ups, others including Citigroup, UBS, Australia’s Macquarie and France’s Societe Generale are said to be in the process of doing so.
UAE Exchange and Finance Ltd also recently signed up as a participant with Central Depository Services Ltd, while HSBC India is also looking to enter retail broking.
Source: The Hindu