It's An Auction For Sharekhan With Dozen Bidders

A deal in broking outfit Sharekhan is almost round the corner. Interestingly, it's an auction and the financial bids are expected to be opened on Saturday April 28, reports The Economic Times.

The report suggests that there are a dozen bidders in the race for a stake in the Mumbai broking firm. They include Goldman Sachs, Texas Pacific Group, Blackstone, 3i, Citigroup, e*Trade, Argonaut Group and Baring Private Equity, besides other few unnamed investors. JM Financial, which sold its stake in the broking business to Morgan Stanley recently, and IDFC (an existing investor) are also reportedly interested in Sharekhan.

Sharekhan is owned by the Mumbai-based Morakhias (37 per cent) and private equity investors General Atlantic Partners, Intel Capital and HSBC Private Equity (45 per cent total). The rest are with the employees.

The sellers say they have got good response from strategic as well as financial investors. Chairman Shripal Morkhia has gone on record saying he did not mind exiting the company entirely if the potential investor wanted a significant controlling stake. “If the buyer insists on a controlling stake, I won’t have an option but to exit,” Morakhia has told ET. Also, the existing PE firms may not be averse to exiting if they get a good value.

The report suggests the valuation of the firm could be anywhere in the range of Rs 800 crore. That may not be overstretched since Sharekhan is among the top five broking firms in the country with nation-wide presence (100 branches across 150 cities). It has a significant online trading customer base too. Think, Indiabulls Financial has a market cap of Rs 9,577 crore ($2.2 billion) as on April 26, 2007. India Infoline has a market cap of Rs 2155 crore ($489 million).

Also look at some of the past deals. French banking group BNP Paribas bought 33 per cent stake in the Kochi-based broking outfit Geojit Securities for Rs 207 crore ($47 million), valuing the company at about Rs 621 crore ($141 million). Citigroup Venture Capital recently invested about $22.2 million in Anand Rathi Securities for a 19.9 per cent stake, at a valuation of $112 million.

There is likely to be good demand for well-run broking firms. State Trading Corporation is selling a 49 per cent stake in UTI Securities, and firms like Global Investment House of Kuwait and Citigroup are talking to STCI.

Citigroup Venture Capital Picks Up 19.9% In Anand Rathi Securities

Anand Rathi Securities Valued At Rs 500 Crore Or $112 Million

Geojit Financial Services Receives $46 Million Investment From BNP Paribas

Citi, Macquarie And Three Other Foreign Firms In Race For Stake In UTI Securities

Broking Firm Fortune Financial Sells 22% Stake For Rs 22 Crore

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