Redington (India) Ltd promoters have decided to take over majority stake in the company's non banking finance subsidiary Easyaccess Financial Services Ltd. The development comes after a proposal from a private equity firm was found not attractive in terms of valuation.
The company said that it has received offer from Creador II LLC for investing up to Rs 100 crore at a pre money value of Rs 250 crore in the form of common equity shares. The proposal was not found attractive as the valuation offered by the PE was below the book value, said the company.
Redington, which has of late issued a notice of postal ballot, saught approval from the shareholders for the Board of Directors to sell between 75-100% stake in Easyaccess Financial Services Ltd, at a price of Rs 18.97 per share to Harrow Investment Holding Ltd, the promoter of the company or its designated nominees, in tranches.
Owing to this challenging phase of NBFC industry and the financial commitments of the company, the Board of Directors has reviewed its financial exposure in Easyaccess and after detailed discussions decided to sell either in part or wholly its stake in the subsidiary.
It has obtained valuation reports from Merchant Bankers to ascertain the fair value of shares. However, the Board of Directors observed that the book value per equity share of the NBFC is higher than the fair value computed by the merchant bankers.
The company has forayed into the financial services by acquiring Easyaccess in 2008, which provided extended finance to the channel partners. Over the years, Easyaccess's channel financing to the IT eco-system brought in financial discipline among the channel partners.
To ensure its growth, Easyaccess had to go beyond IT channel financing and conduct trade finance in other industries. However, many of the investors felt, any change in the business strategy of Easyaccess is not in the larger interests of the investing community since the objective of forming the NBFC was to finance the IT channel.
The company said that it has received offer from Creador II LLC for investing up to Rs 100 crore at a pre money value of Rs 250 crore in the form of common equity shares. The proposal was not found attractive as the valuation offered by the PE was below the book value, said the company.
Redington, which has of late issued a notice of postal ballot, saught approval from the shareholders for the Board of Directors to sell between 75-100% stake in Easyaccess Financial Services Ltd, at a price of Rs 18.97 per share to Harrow Investment Holding Ltd, the promoter of the company or its designated nominees, in tranches.
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The company explained that the current macroeconomic environment continues to be challenging due to the general slowdown in Indian economy with increasing stress in the credit environment in the country.
Owing to this challenging phase of NBFC industry and the financial commitments of the company, the Board of Directors has reviewed its financial exposure in Easyaccess and after detailed discussions decided to sell either in part or wholly its stake in the subsidiary.
It has obtained valuation reports from Merchant Bankers to ascertain the fair value of shares. However, the Board of Directors observed that the book value per equity share of the NBFC is higher than the fair value computed by the merchant bankers.
The company has forayed into the financial services by acquiring Easyaccess in 2008, which provided extended finance to the channel partners. Over the years, Easyaccess's channel financing to the IT eco-system brought in financial discipline among the channel partners.
To ensure its growth, Easyaccess had to go beyond IT channel financing and conduct trade finance in other industries. However, many of the investors felt, any change in the business strategy of Easyaccess is not in the larger interests of the investing community since the objective of forming the NBFC was to finance the IT channel.