Standard Chartered Bank will now pick up 49% stake in UTI Securities, the broking firm that was acquired by the Securities Trading Corporation of India from SUUTI.
The transaction details are not yet known. The agreement to this effect between the two parties will be signed on Thursday.
Confirming the deal with StanChart, a senior official of STCI told FE that the institution would come out with an official statement shortly.
With this deal India will be the first Asian market the bank would engage itself as far as retail stock-broking is concerned.
UTI Securities is into institutional, retail and online broking business. The deal will enhance the bank?s expansion of portfolio businesses to its high net worth customers.
Sometime ago, Neeraj Swaroop, CEO, StanChart India, had evinced interest in the broking arm. ?We are interested in UTI Securities and the talk is on with STCI for picking up stake,? he had then said.
Foreign banks can pick up to 49 % stake in the company as UTI Securities is not allowed to sell more than 50 %. In February 2006, STCI had bought 100 % stake in UTI Securities for Rs 265 crore from the Specified Undertaking.
There is no merchant banker involved in the deal. STCI has appointed a consultant for the deal, while Ernst and Young have carried out the due diligence for the deal. With the partnership of StanChart, UTI Securities, will get a strategic partner with strong capabilities.
There were about 10 bidders for UTI Securities and STCI has emerged as the highest bidder offering Rs 265 crore, followed by Bank of Baroda (Rs 250 crore) and Standard Chartered Bank (Rs 220 crore). STCI is a primary dealer in government securities. STCI will be allowed to use the UTI brand for two years.
