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Baring Private Equity has made an investment in a Kochi-based lesser known, although publicly-listed, broking firm. The Delhi-based private equity fund has acquired 44.8 per cent stake in JRG Securities for a consideration of $35 million (Rs 140 crore) (see a Reuters report). The deal values JRG at $78 million. The preferential issue has been made at Rs 48 a share, while the shares were trading at Rs 65 levels in the stock market. Following the deal, the JRG shares fell. Baring will have to make an open offer for 20 per cent of shares from the public, according to Indian capital market laws.

JRG plans to use the capital to set up a non-banking finance company, while its MD Reji Jacob said that the company would also expand in institutional broking and branch network.

This is probably Baring's first investment in a financial services company. It's interesting why Baring didn't go in for big boys like Angel Broking or SSKI, and went in for a regional broking firm instead. It could be that Baring has got a larger stake for lesser money.

JRG was set up in 1992. The company's website says it's a member of the National Stock Exchange of India (NSE), the Bombay Stock Exchange, the National Multi Commodity Exchange of India Ltd (NMCEIL), the National Commodities Derivatives Exchange Ltd (NCDEX), the Multi Commodity Exchange of India Ltd (MCX) and the Indian Pepper and Spices Trades Association (IPSTA). It's also a full-fledged depository participant of the National Securities Depository and Central Depository Services (India) Ltd. The company is also one of southern India's leading insurance brokers.

So why go participate in an auction kind of situation in deals like Angel?

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