Baring Asia has picked up 12 per cent stake in Sharekhan at a price that values the retail brokerage at Rs 1,700 crore, which is more than double its last year's valuation of Rs 825 crore, when the promoters Morakhias were looking at exiting their investments in the company.
The company has acquired 10 per cent stake from Citigroup Venture Capital International (CVCI), the private equity arm of Citigroup in India Deholdings (CVCI's intermediary vehicle registered in Mauritius) and 2 per cent through a convertible instrument from Sharekhan.
Last year, in one of the hotly-contested deals, CVCI had picked up a majority stake in Sharekhan. However, due to regulatory issues, it was required to bring down its holding in the intermediary vehicle to below 50 per cent within six months.
According to sources close to the development, the reason cited for the offloading was that as per the US Fed regulations, which govern investments by Citi entities in banking and financial services outside the United States, CVCI cannot hold more than 50 per cent in intermediary vehicles.
In case their holdings cross the stipulated limit, they will come under the US Fed scanner. In order to avoid such a situation, CVCI brought down its stake to below 50 per cent in India Deholdings.
Effectively, this is one of the first deals of CVCI in which it holds a majority position.
CVCI along with IDFC had bought close to 76 per cent in Sharekhan for over Rs 620 crore, buying out the stake held by promoters Morakhias and by a clutch of private equity funds led by General Atlantic.
Private Equity funds TPG, Baring Asia and 3i were also in the race for buying stakes in Sharekhan.
The Mumbai-based brokerage, Sharekhan is also planning to launch an initial public offer (IPO) this financial year for unlocking its value. "We are in preliminary discussions with merchant bankers for an IPO, which will constitute the minimum dilution of 10 per cent only," said another source.
Recently, HSBC acquired a 73.21 per cent stake in IL&FS Investsmart for a consideration of Rs 1,110 crore from E*Trade Mauritius and IL&FS.
