Europe-based Nogard Investment is at an advanced stage of negotiations to buy a 9.5% stake in broking firm Fortune Financial Services India (FFSIL) through a preferential allotment of shares, according to a source who is involved in the transaction. A formal announcement is expected shortly.
The deal values the broking firm at roughly Rs 253 crore, post dilution. According to sources, Nogard Investment is a special purpose vehicle which has been formed by some Europe-based investors to invest in the brokerage, details of which are not known.
FFSIL was founded in 1991 by Nimish Shah and JT Poonja. It has presence in retail broking, investment banking, corporate advisory, and distribution of financial products. It is a Category-1 Sebi registered merchant bank providing corporate advisory services to mid-sized corporate clients.
The company currently has about 15 branches and 45 franchisees.
The proceeds from the preferential issue of shares will be used to strengthen the company’s presence in investment banking and research, sources said. FFSIL is also looking to increase its insurance and mutual fund distribution network.
FFSIL had recently sold 22% stake to a group of UK-based investors for about Rs 22 crore. Earlier, the shares were allotted at Rs 100 a share. The deal had then valued the company at Rs 100 crore. The investors include Lytton Grove Corp, and Bomin Finance.
Despite the recent slump in the stock market, there has been a flurry of activity in the broking space. Recently, Baring Asia picked up 12% in domestic brokerage Sharekhan. Another domestic brokerage Religare Securities last month acquired UK-based Hichens.
Source: Economic Times