Baring PE India to exit brokerage Inditrade with bare returns

Baring Private Equity Partners India (no connection to Baring Private Equity Asia) has inked an agreement to sell its entire stake in public listed brokerage and financial services firm Inditrade Capital Ltd (formerly JRG Securities Ltd) and its subsidiary JRG Fincorp Ltd to a group of investors.

Sudip Bandyopadhyay, former head of Reliance Money who quit the Reliance Capital group firm a few years ago and was working with Destimoney, has joined hands with two other companies—Juno Moneta Technologies and AT Invofin India—to acquire the entire 48.73 per cent stake in Inditrade from Baring PE India. The deal is worth Rs 48.36 crore ($7.3 million). Separately, it is selling its entire holding in JRG Fincorp for an undisclosed amount.

When contacted by VCCircle, Bandyopadhyay said he is buying the stake along with his friends and family but declined to share more information on the same.

Baring PE India originally invested in the company in 2007, a year after JRG Securities went public. This was at the peak of the previous stock market boom that ended in January 2008.

The PE firm had initially committed to invest around Rs 114 crore through a mix of preferential allotment of shares and warrants. However, it did not opt for conversion of warrants into equity thereby foregoing its payment for the quarter of the sum it brought to subscribe to the convertible warrants. It also picked a 47 per cent stake in NBFC arm JRG Fincorp.

In 2009, it took management control of the public listed firm.

Along with some shares acquired in a mandatory open offer and further share purchases through the stock market directly and investment in JRG Fincorp, it is estimated to have put in close to Rs 88 crore. Although the deal value for JRG Fincorp stands undisclosed, in total Baring India PE is expected to take out Rs 92 crore in total, barely managing to take out the principal of its seven year old bet.

It is expected to move out with under 2 per cent internal rate of return (IRR) in rupee terms. PE firms chase IRR of 20-30 per cent in local currency. However, in dollar terms Baring PE India would have taken a haircut, given the sharp appreciation of greenback against Indian currency.

An email sent to Rahul Bhasin, managing partner of Baring PE India, on the development did not elicit any response till the time of filing this article.

Bandyopadhyay and co-acquirers have also made an open offer to buy another 26 per cent stake in Inditrade for around Rs 26 crore.

IL&FS Capital Advisors is acting as the manager to the open offer while Agram Legal Consultants is providing legal advice to the buyers.

Inditrade scrip shot up 20 per cent to hit the upper trading circuit limit for the day to close at Rs 33.7 a share on Wednesday.

Founded in 1994, Inditrade Capital offers equity, commodity brokerage and insurance services, mutual fund, depository, fund management and other financial services.

Baring PE India that had last raised $563 million in its third fund eight years ago, around the same time it invested in Inditrade, has been more active in investing in public listed firms over the last three years.

Note: This article has been updated with additional information related to the transaction.

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