US fund to pick up stake in Angel Infin Private

PRIVATE EQUITY WATCH

A US-based private equity fund is close to picking up a minority stake in Angel Infin Private, the holding company of domestic brokerage house Angel Broking.

International Finance Corporation (IFC), the private equity arm of World Bank, is another strong contender in the race. Two private equity investors, one each from Europe and Asia respectively, have also evinced an interest in the stake sale.

The due diligence process has been completed and only the final financial negotiations remain, according to sources. The deal is likely to be formally announced shortly. The valuation of the group is close to Rs 1,200-1,300 crore.

When contacted, Dinesh Thakkar, chairman and managing director said, "We will be announcing the name of the investor by the first week of next month."

"The funds would be infused into our holding company, which is a NBFC (non-banking finance company). This will be our main business. The new investor will help us to increase our international presence and build on the asset side by providing us with finance and back-end support," he added.

"We have already applied to all the regulators and they have given us an in-principle approval," Thakkar emphasised.

Private equity players are looking to enter the NBFC space as they see a huge growth potential. Recently, the New York-headquartered Lehman Brothers picked up 26 per cent stake in ECL Finance, the non-banking financial arm of Edelweiss Capital for close to $45 million.

Angel Infin Private will be the holding company of the group. The broking, commodity and distribution businesses will be the 100 per cent subsidiaries of this company.

The Angel group is also planning to foray into the asset management and life insurance businesses and would be applying to the Securities and Exchange Board of India (Sebi) and the Insurance Regulatory and Development Authority (Irda) for the required licenses. "We are planning to enter the mutual fund and insurance businesses by next year," Thakkar said.

The new investor will be issued fresh equity in Angel Infin Private. Angel expects to raise Rs 150 crore from the investor to fund its retail expansion, taking the number of its branches from 80 to 260 in smaller cities.

The company plans to garner around Rs 250 crore through private placement in two tranches. It will raise around Rs 150 crore in the first tranche by diluting around 10-15 per cent. In the second tranche, by next year, it would mobilise another Rs 100 crore by diluting 5-7 per cent holding.

The Angel Group is promoted by Dinesh Thakkar and his close family, which together holds 70 per cent. The remaining 30 per cent is held by friends and relatives.

Angel Broking is one of the top five retail brokerages in the country with more than 1,800 employees, 12 regional centres and 60 branches catering to more than two lakh retail clients.

The investment in Angel is the latest in a string of investments by foreign companies in the Indian NBFC sector. BNP Paribas bought 50 per cent stake in an arm of SREI Infrastructure, AIG Capital bought 75 per cent in Chennai's Vivek Hire Purchase. Barclays bought Chennai's Rank Investments.