INDIA BUSINESS WORLD - APRIL 2007
The Month that was ...

CITIGROUP VENTURE TO BUY 19.9% STAKE IN ANAND RATHI

Leading private equity investor Citigroup Venture Capital International is picking a 19.9% stake in Anand Rathi Securities (ARS), a Mumbai-based stock brokerage promoted by former BSE president Anand Rathi. While announcing the deal on Friday, ARS said the funds will be utilized for the expansion purpose and also for meeting working capital requirements. The company, however, did not disclose the size of the deal and the price at which the stake is being acquired by the US-based fund. Though the agreement was signed recently, the actual placement will take place in the next few weeks after seeking necessary approvals, said Mr Rathi, chairman, ARS. The deal was managed by the broking firm itself.

In the past few years, many Indian brokerages have raised funds through the PE route, which has mainly gone into expansion of their businesses. Motilal Oswal Securities, India Info line, Edelweiss Securities, IL&FS Investsmart and Indiabulls Financial Services are among the brokers which roped in foreign investors when the market was bullish. "There is no strategic tie-up as Citigroup is buying the stake basically for investment purpose. The funds will be used for achieving faster growth in our business," said Mr Rathi. He, however, refused to divulge details like deal size and price.

ARS offers broking and other market-related services to its customers through a network of 150 branches and over 200 business associates spread across the country. The funds will be used for further expansion of the network and enhancing quality of services with help of advanced technology, said ARS. Having gone through turbulent times when he was at the helm of the BSE in early 2000s, Mr Rathi has remained focused on its broking operations in the past few years. ARS has achieved reasonably good presence in retail, institutional broking and has taken a foothold in segments like wealth management, IPO and insurance products distribution. Broking accounts for 50-60% of the business while non-broking activities like investment banking, MF, IPO distribution and advisory services account for the rest.

Incorporated in 1994, ARS has a good presence in retail segment with a customer base of over 10 million. Its investment banking division offers a range of advisory services in areas of strategic alliances and fund raising. The firm also offers structured products, market neutral strategies, arbitrage products and capital protection products.