Citi, 4 others in race for UTI Sec

Securities Trading Corporation of India has put 49% stake on the block.

International brokerage house Citigroup, Australia's Macquarie Bank, Standard Chartered, France's Societe Generale and Kuwait-based Global Investment House are in the race to acquire 49 per cent stake in UTI Securities, currently owned by Securities Trading Corporation of India (STCI).

STCI, which bought 100 per cent stake in UTI Securities for Rs 265 crore last year from Specified Undertaking of UTI (SUUTI), is looking to sell 49 per cent stake to a strategic partner.

As per the deal, STCI has a minimum lock-in of 51 per cent stake in UTI Securities for three years, which ends in 2008.

A top executive of STCI confirmed that the company was divesting 49 per cent stake to a strategic partner. He said the company preferred a foreign player, considering the expertise they would bring in. The official, however, refused to divulge details.

Sources said the talks were at an advanced stage and a prospective strategic partner would be shortlisted soon.

The keen interest shown by foreign brokerage houses follows the massive potential for retail broking business in India. Already, French major BNP Paribas has bought 33.35 per cent stake in south-based Geojit Financial Services for Rs 207 crore, while E*Trade, America's fourth largest online broking firm, took controlling stake in IL&FS Investsmart last year.

Citigroup's private equity arm Citigroup Venture Capital International took 19.97 per cent stake in Mumbai-based Anand Rathi Securities. Another retail brokerage firm Motilal Oswal Financial Services placed 9.48 per cent of its stake with private equity venture New Vernon Private Equity Ltd and Bessemer Venture Partners, valuing the company at Rs 13.45 billion.

Private equity firm Gernal Atlantic invested about Rs 144 crore ($ 31 million) in retail broking firm Sharekhan in April 2006 through a combination of primary investment and by purchasing the entire shareholding of First Carlyle Ventures. Intel Capital and a group of funds advised by HSBC Pvt Equity are also investors in Sharekhan.

Last year, Goldman Sachs ended its 10-year alliance with Kotak Mahindra, to expand its business in India, while Morgan Stanley parted ways with Nimesh Kampani's JM Financial to pursue an aggressive business plan in the country.

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FOREIGN INTEREST

French major BNP Paribas has bought 33.35 per cent stake in Geojit Financial Services for Rs 207 crore

E*Trade, America's fourth largest online broking firm, took controlling stake in IL&FS Investsmart last year

Citigroup's private equity arm, Citigroup Venture Capital International took 19.97 per cent stake in the Mumbai-based AnandRathi Securities

Motilal Oswal Financial Services placed 9.48 per cent of its stake with private equity venture New Vernon Private Equity and Bessemer Venture Partners, valuing the company at Rs 13.45 billion