Angel to sell 25% stake to PE firms

Angel Broking, the Mumbai-based retail brokerage, is planning to sell 25 per cent stake to private equity players to raise Rs 250 crore to fund its expansion.

The company is expected to complete the expansion in two phases, which includes an initial public offer, said Dinesh Thakkar, chairman and managing director.

"We are planning to raise around Rs 250 crore through private placement in two tranches. In the first tranche, the group is planning to raise around Rs 150 crore by diluting around 10-15 per cent stake. In the second tranche by next year, we will raise another Rs 100 crore by diluting 5-7 per cent holding," he said.

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

The move by Angel Broking comes close on the heels of similar deals in other domestic brokerage houses in recent times. Citigroup's private equity arm, Citigroup Venture Capital International, bought 19.97 per cent stake in Anand Rathi Securities, while Motilal Oswal Financial Services sold 9.48 per cent stake to private equity venture, New Vernon Private Equity Ltd and Bessemer Venture Partners.

Private equity firm General Atlantic invested about Rs 144 crore in retail brokerage firm Sharekhan. London-based Greater Pacific Capital bought 20 per cent take in Edelweiss Capital in 2005.

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 which caters to over two lakh retail clients. The company plans to set up an additional 250 branches three years.

Analysts said domestic brokerage outfits are expanding as several multinational firms were eyeing the booming equity broking business in India.

Citigroup, UBS, Standard Chartered, Macquarie, Goldman and France's Societe Generale planning to foray into the retail brokerage industry.

Some of the recent entrants in the domestic brokerage business include BNP Paribas, which acquired 33 per cent stake in Geojit Financial Services, E*Trade, the fourth-largest online broking firm in the US, which acquired majority control in IL&FS Investsmart, and BankMuscat, which bought 43 per cent in Mangal Keshav Group.