STCI buys out UTI Sec for Rs 265 cr

Securities and Trading Corporation of India (STCI) has acquired UTI Securities for Rs 265 crore, outbidding Bank of Baroda and Standard Chartered Bank. Reliance Capital did not submit the financial bid.

All the bids were submitted this morning. STCI has emerged as the highest bidder at Rs 265 crore, Rs 15 crore more than Bank of Baroda's, while StanChart had quoted Rs 220 crore.

The Specified Undertaking of Unit Trust of India (SUUTI) had put UTI Securities on the block two months ago. ICICI Securities was the advisor to SUUTI.

The acquisition marks the entry of STCI, the largest primary dealer, in the whole array of financial services. UTI Securities offers services in equity, debt markets, mutual funds and insurance products. It is also into portfolio management and depository services.

Engaged in primary dealership and government securities, the company has recently started commodity trading through subsidiary UTISEC Commodities.

STCI, as part of the agreement with SUUTI, would be able to use the UTI brand name for two years.

Also, the acquisition will provide STCI a foothold in major cities through the UTI Securities' network of 20 branches and 150 franchisees.

STCI managing director G Narayanan said: " We will run UTI Securities as an independent company. The acquisition will help to broad base our business," he said, adding all the employees would be retained.

He also said that the share purchase agreement would be signed in few days. Bank of India holds 29 per cent stake in STCI, while State Bank of India and its associates hold 12 per cent. IDFC holds a 10 per cent stake, while the balance 49 per cent is widely held by public banks and financial institutions.

STCI has a presence in institutional segment for securities trading. It had recently diversified into distribution of mutual funds. At present, the net worth of STCI stands at Rs 900 crore.

A source close to development said ASUUTI would prefer to sell its stake in NSE, NSDL, CARE, Stock Holding Corporation of India, North Eastern Development to public sector undertakings.

SUUTI plans to sell stake in a handful of companies - NSE, NSDL, Care, Icra, OTCEI, Stock Holding Corporation of India and North Eastern Development Corporation - by end of 2005-06. No timeframe has, however, been fixed for offloading its stake in Larsen & Toubro, UTI Bank and ITC.