PE firms may pick up majority stake in JRG

Jul 26, 2007
Ashish Rukhaiyar
MUMBAI

PRIVATE equity appetite for Indian brokerage houses seems far from over. It’s not just big and strong players who manage to strike impressive deals, small and niche brokerage houses also elicit interest from PE players. They provide PE firms an easy access to the buoyant Indian capital market, and that too, at decent valuations.

According to sources, Kochi-based JRG Securities is in talks with a couple of PE players and if all goes well, there could be a deal in the offing. The promoters of JRG Securities are in discussion and on the lookout for strategic partners to help them scale up their operations, said a source close to the development.

It is believed that two PE entities — one each from the US and Europe — have evinced interest in acquiring a majority stake in the brokerage that has around 400 branches and caters to more than two lakh customers. Sources further added that the entities are looking at a stake of around 40% for about Rs 100 crore, which is at a huge premium over its current stock price.

“It is believed that the promoters are in no mood to dilute their holdings, and one might see fresh equity in the form of preferential allotment,” one of the sources added. Company officials, when contacted, refused to comment.

The market seems to have already got a hang of the undercurrent. The stock of JRG Securities has surged by nearly 40% during the past one month. On Wednesday, it closed at Rs 54, up nearly 2%, even as the benchmark Sensex lost nearly 100 points.

Apart from BSE and NSE, JRG is a member of National Multi Commodity Exchange of India (NMCEIL), National Commodities Derivatives Exchange (NCDEX), Multi Commodity Exchange of India (MCX) and India Pepper and Spice Trade Association (IPSTA). It is also one of south India’s leading insurance brokers.