Brokerage firm Inditrade Capital Ltd, formerly JRG Securities, will sell its equity broking business to Mumbai-based peer Choice Equity Broking Pvt. Ltd.
The deal, which is subject to statutory and regulatory approvals, will fetch Inditrade Rs 32 crore ($4.71 million), Inditrade and Choice Equity’s parent said in separate announcements to stock exchanges on Friday.
The transaction appears to be part of Inditrade’s broader strategy of raising capital for agri-commodity financing and lending businesses.
VCCircle had reported last month that Inditrade was in talks with global development financial institutions to raise capital as it aimed to double its loan book. The size of the loan book was around Rs 450-500 crore at the end of March 2018. The agri-business has a net worth of about Rs 110 crore, VCCircle had reported.
Following the deal announcement, shares of Inditrade remained locked-in at the 5% upper circuit on the BSE on Friday to close at Rs 63 apiece.
Shares of Choice International Ltd, the parent of Choice Equity, advanced 1.23% to close at Rs 139.45 each after touching an intraday high of Rs 145.
The acquisition will provide Choice Equity with access to 1.2 lakh clients through a network of 27 branches and 440 franchises and business associates. It will also take on board 313 employees of Inditrade.
Inditrade Capital
Kerala-based Inditrade was incorporated in 1994 and primarily focuses on agri-commodity financing business, besides the personal and micro-finance businesses.
Inditrade, through a unit, offers short-duration loans against non-perishable exchange-traded non-essential farm commodities such as turmeric, pepper, rubber and soya.
According to the company’s 2016-17 annual report, just about 12-18% of the Rs 4 lakh crore agri-commodity market is served by banks and financial institutions.
In 2016, Inditrade had acquired Edel Commodities Trading Ltd, a subsidiary of Edelweiss Financial Services Ltd, to expand its footprint in the western and northern parts of the country.
Inditrade is also aiming to grow its microfinance business. Late last year, the company agreed to pick up a majority stake in Varam Capital Pvt. Ltd, a microfinance institution based out of Raipur. Inditrade Microfinance disbursed Rs 100 crore in 2017-18.
Inditrade was previously part-owned by Baring PE India. The private equity firm had acquired a stake in Inditrade in 2007 and had taken management control of the brokerage in 2009.
In 2015, Baring PE India sold its entire 48.73% stake in Inditrade to Sudip Bandyopadhyay, former head of retail broking firm Reliance Money, Juno Moneta Technologies and AT Invofin India at a loss in a deal that was worth Rs 48.36 crore. The three promoters now own about 72% of the company.