Mumbai-based Edelweiss Financial Services is engaged in talks with south-based Inditrade Capital to sell its agri commodity business Edelweiss Agri Value Chain Ltd (EAVCL).
The Economic Times reported citing sources that Inditrade Capital, formerly JRG Securities, is in the advanced stages of the talks with the deal likely to be completed in the next couple of months.
EAVCL is a 100% wholly owned subsidiary of Edelweiss Commodities Services Ltd (ECSL), which in turn is a 100% wholly owned subsidiary of Edelweiss Financials Services Ltd (EFSL).
Emails queries sent to Edelweiss Financial Services did not elicit any response while Sudip Bandyopadhyay, majority shareholder in Inditrade Capital, declined to comment.
While the details of the deal structure is getting firmed up, the report said the companies reached an agreement on transfer of trading and other agri related business in India, Nigeria, Chad, Turkey and Dubai, among other countries, to Inditrade. After the deal, Edelweiss or its promoters may pick up a stake in Inditrade, it added.
Last year, Bandyopadhyay bought out the stake of Baring Private Equity Partners India in public-listed brokerage and financial services firm Inditrade Capital.
Shares of Inditrade Capital was trading at Rs 46.05, up by 10% in a strong Mumbai market. Shares of Edelweiss were trading at 107.15, up by 0.52%.
Bandyopadhyay, former head of Reliance Money, quit the Reliance Capital group firm a few years ago and was working with Destimoney. He 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).
Early this year, he bought a 50% stake in Bimadirect, a Hyderabad-based online insurance policy aggregator and seller for an enterprise valuation of $7-8 million (Rs 47-54 crore), said a February report by The Hindu Business Line.
The deal would allow Inditrade to enhance its agri lending and trading business and Edelweiss may get access to various markets, said the report by The Economic Times. Edelweiss, however, may retain its lending or financing book related to agri business India and abroad which is worth around Rs 5,000 crore, it added.
Incorporated in 2014, EAVCL provides integrated post-harvest management solutions including warehousing and collateral management for agri commodities. It offers storage and preservation and collateral management services for agri commodities along with allied services such as testing and certification and also procurement of agri commodities, according to its website.
During FY2015-16, EAVCL reported a profit after tax of Rs 1.5 crore on a total income of Rs 984 crore compared with a loss of Rs 2 lakh on total income of Rs 66 crore during FY2014-15. As on March 31, 2016, EAVCL’s tangible net worth was Rs 99.6 crore with borrowings of Rs 558.7 crore.
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