Citigroup Venture Capital International, a Citigroup investment arm, is close to buying out the entire promoters' holding in the Mumbai-based brokerage firm Sharekhan from the Morakhia family for Rs 280-300 crore. The acquisition of Sharekhan will help Citi to expand its retail broking business.
Negotiations were in the final stages and an agreement with Citi was likely to be signed soon, investment banking sources said. However, Sharekhan executives said a decision would be taken in a few days.
"We have not yet taken the decision. But it will be taken by this Friday. One thing is sure, we (the Morakhia family) will exit completely from Sharekhan," Sharekhan promoter Shripal Morakhia said.
The Morakhia family holds 33 per cent in Sharekhan. Citi will also have to buy out global private equity funds like General Atlantic Partners, Intel Capital and HSBC Private Equity to get a controlling stake in the company. These funds together hold more than 30 per cent in the broking firm. IDFC also holds a 33 per cent stake in Sharekhan.
In addition to Citi, General Atlantic, Texas Pacific, JM Financial and IDFC have put in bids for acquiring the Morarkhia family's stake.
Sharekhan has been valued at Rs 700 crore, according to investment banking sources. Valuations of Indian broking firms have gone up after the Bombay Stock Exchange sold minority stakes to two foreign stock exchanges.
"Since valuations have gone up, local promoters are planning to cash out," said a Mumbai-based analyst working with a local brokerage firm.
Earlier this year, the BSE had sold a 5 per cent stake each to Singapore Exchange Ltd and Deutsche Boerse, both of which paid Rs 5,200 for every BSE share.