Baring Pvt Equity picks up 12 percent stake in Sharekhan

Baring Pvt Equity picks up 12 percent stake in Sharekhan

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New Delhi: Baring Private Equity has picked up 12 percent stake in Mumbai-based brokerage firm Sharekhan in a deal worth Rs 240 crore (60 million). The deal values the brokerage company at Rs 2,000 crore. The transaction is through a mix of secondary sale by the largest shareholder, Citigroup Venture Capital (CVC), and additional capital infusion, reported The Economic Times.

Baring and Merrill Lynch were believed to be the front-runners negotiating to pick up a minority stake in Sharekhan. Last year, CVC, along with IDFC, had invested around Rs 650 crore to pick up 85 percent equity in Sharekhan. At that time Sharekhan had a valuation of Rs 800 crore. This translates into a valuation growth of over 150 percent in ten months.

CVC owns 75 percent in Sharekhan, while IDFC holds 10 percent. The management and employees hold the remaining 15 percent. CVC India country head Ajay Relan confirmed that Sharekhan has inducted new investors but declined to comment on valuations.

Officials from Baring were not available for comments. Last year, CVC and IDFC together had acquired 37 percent equity owned by Sharekhan promoter Shripal Morakhia while 48 percent was acquired from other shareholders, including General Atlantic, Intel Capital and some funds advised by HSBC Private Equity India.

CVC, which had a significant majority stake in the brokerage, was believed to be keen on diluting its stake in Sharekhan due to some regulatory issues. The latest Baring transaction involves additional capital infusion by existing shareholders - including IDFC which invested proportionately to maintain its 10 percent holding - in Sharekhan, say sources close to the development. CVC?s stake, however, has now come down to 63 percent from 75 percent.
Source: IANS
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