| Infrastructure Development Finance Company (IDFC), the country’s largest infrastructure financial intermediary, has increased its stake in institutional brokerage house SSKI Securities by another 14 per cent to about 80 per cent, and plans to list it at a later stage. |
| A senior company official confirmed the development and said, “IDFC recently made an offer to the employees of the brokerage firm to buy their shares and the move is aimed at consolidating their holdings in the company. IDFC will look at unlocking the value of the company in the future by floating an initial public offering.” The rest 20 per cent stake is held by senior employees of SSKI. |
| In September 2006, IDFC acquired 33.33 per cent stake in SSKI Securities for Rs 100 crore, a privately held leading domestic mid-size investment bank and an institutional brokerage and research platform. In the middle of last year, it further increased its stake to 66 per cent by buying out the share held by founder Shirpal Morakhia. |
| “As the profitability of our pure lending business is under pressure, we need to aggressively develop our fee generating businesses, mainly asset management and investment banking,” said a senior IDFC official. |
| Early this month, IDFC acquired Standard Chartered’s asset management business in India for $205 million. In financial markets, the company is already into structure finance, debt syndication and private equity. |
| On its investment in SSKI, IDFC’s annual report said, “The SSKI investment is part of IDFC’s strategy to diversify its revenue base, increase fee-based revenue streams and participate in all aspects of the value chain for an infrastructure client. The SSKI platform is expected to enhance equity capital markets product offering for IDFC. Also, given the changing competitive landscape in the investment banking in India, there is an opportunity to build on the SSKI platform and develop a credible domestic investment banking franchise.” |
| SSKI’s corporate finance business is primarily focused on the infrastructure space. IDFC’s fee-based income has increased by almost 30 per cent from Rs 95.5 crore in 2005-06 to Rs 123.9 crore in 2006-07. |
Source: Business Standard