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Thursday, Apr 20, 2006

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Motilal Oswal offers 9% stake to foreign equity investors

Our Bureau

Mumbai , April 19

Motilal Oswal Financial Services Ltd (MOFSL), one of the major stock broking outfits, has offered 9.29 per cent stake in the company to two foreign private equity investors — New Vernon Private Equity Ltd and Bessemer Venture Partners — for a consideration of Rs 125 crore.

The issue price of each share of Rs 2 paid-up is Rs 208 per share, the company announced here on Wednesday.

"The fund so raised will be deployed for various strategic initiatives, both organic and inorganic, and working capital requirements," said Mr Motilal Oswal, Chairman & Managing Director, MOSFL.

15% for ESOP

The company has reserved 15 per cent for employee stock option scheme (of which about 14 per cent is already allocated) and the remaining stake is held by the promoters, Mr Oswal said.

Making a presentation on the stock broking industry, Mr Raamdeo Agrawal, MD, said the company has plans to take its market share from 4 per cent to 10 per cent by 2010 with the highest return on equity in the industry. "In the US, the top three securities firms are amongst the top 50 in Fortune 500 with their individual market cap of around $70 billion; that's almost 0.5 per cent of total market cap each. Indian markets also offer similar opportunities in the securities business," Mr Agrawal said.

Mr Rajiv Sahney of NV Advisory Services said the private equity firm would be a "long term investor" in MOFSL. New Vermon Private Equity, which has a corpus of $1.2 billion for India investments, was looking at textiles, engineering and auto component sectors in the country for equity partnerships. Already $900 million has been deployed in the country in various companies, he added.

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