April 2007
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Prabhudas Lilladher may dilute its equity

Financial services seem to be gaining more favour with the investor community and it is now the turn of Prabhudas Lilladher to dilute stake.

Arun and Dhiren Seth, promoters of the 63-year-old brokerage firm Prabhudas Lilladher are busy trying to expand their reach through the country but they need money and NDTV has learnt that private equity investors might pick up stake.

Perhaps fierce competition from big players like Reliance, Goldman Sachs and Merrill Lynch is making Prabhudas Lilladher scout for fresh capital to expand operations across India.

Sources say that Prabhudas might dilute up to 15 per cent of equity to raise about $25-30 million putting the valuation at around $200 million. These funds are likely to be raised in the next three months.

Negotiations are on with Citi, Texas Pacific and General Atlantic. However, the management refused to comment when contacted.

Large capital

“On this issue we are not going to comment to the media,” said Dilip Bhat, Executive Director, Prabhudas Lilladher.

Financial services are a favourite among investors. One month ago Citigroup's PE arm picked up around 20 per cent stake in Anand Rathi Securities for nearly $20 million, BNP Paribas has hiked its stake in Geojit Securities recently and this Thurdsay Bank of Muscat has picked up 43 per cent stake in Mangal Keshav.

“These boutique companies have immense value. Many of them are in the business for years, so it makes sense for any PE or any financial investor to pick up equity,” said Ved Prakash Chaturvedi, MD, Tata, Mutual Fund.

For brokerages like Prabhudas roping in financial investors makes sense due to the increased competition from large players. Hence small local players like Prabhudas will need a lot of capital to expand across India.

Source : NDTV profit

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