Private equity giant Carlyle has upped its exposure to brokerage and financial services firm India Infoline by acquiring another 1.8 per cent stake through a secondary market transaction for Rs 40.5 crore or around $8.5 million.

The deal comes at an interesting time when financial services firms have been re-rated downwards, given poor stock market sentiments. It is one of the rare PE deals in recent times in the pure brokerage space, although there have been a few investments in the financial services space, such as L&T Finance Holdings and Magma Fincorp.

Carlyle Mauritius Investment Advisors Ltd, registered as a foreign institutional investor with markets regulator SEBI, acquired the shares at Rs 77.99 per unit on Tuesday. India Infoline scrip rose 2.78 per cent to close at Rs 77.6 a share on the BSE in a strong Mumbai market.

India Infoline was trading close to its 52-week low after hitting a one-year high of Rs 129 a share last October. Shareholding disclosures revealed that Carlyle took an exposure into India Infoline between April and June this year when the share price was hovering between Rs 66 and Rs 80 per unit. It also bought more shares between since then. This means the PE giant has invested over Rs 140 crore this year in the Mumbai-based firm, according to VCCircle estimates.

Carlyle, which is looking to go public in the USA, appears to be digging for gold in a company which has, in the past, disappointed some other PE firms.

Two years ago, Singapore-based billionaire Richard Chandler-led investment firm Orient Global had exited its one-and-a-half-year-old investment in India Infoline with an estimated haircut of over 50 per cent. But to be fair, Orient Global had invested in India Infoline at the peak of the bull market and at the end of March 2008, held over 11 per cent stake through two funds – Orient Global Tamarind Fund Pte and Orient Global Cinnamon Capital Ltd.

Orient Global had picked the stake through a preferential allotment in early 2008 after striking the deal in November 2007. It had invested Rs 550 crore in a deal that valued the firm at Rs 8,564 crore and bought in more shares to bring down the average cost of purchase by investing around Rs 300 crore more. India Infoline currently has a market cap of Rs 2,342 crore.

This transaction was part of a multiple deal where Orient Global also picked minority stakes in two other businesses of India Infoline – namely, insurance broking and consumer finance subsidiaries. Last year, Orient Global Tamarind also exited these investments at a loss.

India Infoline also counts among its shareholders academic and veteran value investor Shivanand Mankekar. Incidentally, Mankekar also bought more shares of the company early this year. His stake had more than doubled, from 1.1 per cent as of March 31, 2011, to 2.26 per cent as of June 30.

See Our Earlier Reports

Orient Global Exits Two Unlisted Arms Of India Infoline At A Loss

Singapore PE Firm Orient Global Exits India Infoline At A Loss

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