CITI Venture Capital International, a part of Citigroup, has invested Rs 164 crore in the New Delhi-based brokerage Globe Capital Market. Citi’s shareholding in the company will be in the range of 10-15%, depending on the size of the warrant issue the promoters plan to subscribe. The deal puts the valuation of the company at Rs 1,100-1,640 crore.
When contacted Globe Capital chairman Ashok Agrawal told ET that the fund will be utilised to expand the company’s retail network and arbitrage business. So far, Globe’s retail network is confined to northern India. Mr Agarwal said Citi will send a representative on the board. Globe does not have any immediate plans of listing itself, but it will eventually do so, he added. City-based Singhi Advisors were the sole advisors to the transaction.
“The arbitrage opportunities attach lower risk but gives return better than debts. I would like to utilise a major chunk of the fund to expand our arbitrage business to help benefit the small investors,” he said. Globe has a large presence in F&O segment. It is clearing an average of 10% of F&O segment of NSE.
It is a trading-cum-clearing member of NSE and BSE, depository participant in NSDL and CDSL and also approved DP from the commodity exchanges such as NCDEX and MCX.
It has recently received Sebi permission to acquire a London-based company, ICON Capital, a member of the London Stock Exchange. Globe plans to expand overseas and has already established operations in Dubai through a subsidiary.
The transaction puts the valuation of Globe ahead of brokerages like Centrum Finance (its M-cap stood at Rs 730 crore on Friday) and Emkay Shares (Rs 552 crore). But its way behind leading players like Indiabulls (Rs 16,473 crore), Edelweiss Capital (Rs 7,404 crore), Future Capital (Rs 6,220 crore) and India Infoline (Rs 7,404 crore).
Citi Venture Capital International managing director Ajay Relan said: “Globe is one of the few large non-institutional clearing members in India which showcases its credibility among brokers. We are pleased with its business model and their aspiration to expand the operations globally.”
Singhi Advisors vice-president Gopal Agrawal said the broking sector is poised for significant growth and is excepted to attract more private equity and strategic investments.
Source: Economic Times