The private equity division of the media group Bennett, Coleman & Company has picked up 2.098 per cent stake in the leading Delhi-based stock broking firm SMC Group at an enterprise value of $875 million (Rs 3,500 crore). Even though BCCL usually trades in advertising space in return for equity, SMC has got a huge appreciation in valuation.
In May last year, Millennium India Acquisition Company, Inc. (MIAC) had picked up 14.75 per cent stake in the company for $39.97 million, which valued the company then at $228 million pre-money, or approximately 8.6x FY2008 projected earnings on the SMC Group. Following the Bennett Coleman transaction, MIAC’s stake in SMC has come down to 14.44 per cent.
MIAC was earlier listed on the American Stock Exchange, which later shifted to the NASDAQ OMX Group, Inc. from April 15, 2008. MIAC is a blank check firm which raised capiatl from the US stock exchange with the sole aim of investing in an Indian entity. Currently, MIAC’s principal asset is its equity interest in the SMC Group. The remainder of MIAC’s assets are invested in cash and cash equivalents.
MIAC has also announced SMC Group’s financial results for the year 2007-08. The stock broking firm has recorded total revenues of about $57.1 million (Rs 228.6 crore), up 66.8 per cent from $34.2 or Rs 137 crore the previous year. The net profits stood at $15.5 million (Rs. 62 crore) compared to $12.6 million (Rs. 50.48 crore) the year before. The EBIDTA at $22.4 million (Rs. 89.83 crore) has grown at 30.7 per cent compared to its previous year.
The SMC Group contains combined financial information for SMC Global, SAM Global and SMC Comtrade. SMC Comtrade was consolidated into SMC in April, 2007.
SMC Group also claimed that it recorded an average of 254,000 trades per day for FY 2008 compared to an average of 130,000 trades per day for FY 2007. It claims to have reported a 130 per cent increase in trading turnover: $250 billion for FY 2008 compared with $109 billion, for FY 2007.
Of course, these numbers do not refelect the current slump in the stock market since the they are for the last financial year. The fixed costs of the broking firms have gone up while the trading turnover has crashed hugely.
SMC has a retail distribution network of 1,260 branches currently compared with 803 branches as of March 31, 2007. It has presence in 325 cities compared with 208 cities last year. It has a client base of 450,000 investors.