US PE fund buys stake in Prabhudas Lilladher

Foreign investors’ appetite in Indian brokerage companies does not seem to be abating. Balyasny Asset Management — a US-based private equity fund has invested $10 million for 2.83% stake in Prabhudas Lilladher Advisory Services (PLAD). This is the holding company of Prabhudas Lilladher, a domestic brokerage firm.

With the stake sale, the holding company has been valued at around Rs 1,450 cr. While the US fund has been investing in India across various sectors, it will be the first time that it has taken a stake in a financial services company. Prabhudas Lilladher is a broking firm, which has restructured itself to offer a gamut of capital market financial services such as institutional and retail broking, capital market, corporate advisory and a non-banking finance company (NBFC). PLAD was created to carry on corporate advisory business and is also the holding company of the entire PL group.

Confirming the deal, senior company officials told ET that the company was planning to go in for a second round of funding sometime later at a premium to this deal. The company is looking at additional dilution of around 10% equity to raise approximately $50 million. Apart from PLAD, other subsidiaries include Prabhudas Lilladher (PL) — to undertake traditional brokerage business, Prabhudas Lilladher Financial Services (PLF) — an RBI-approved NBFC, which will provide margin funding. PL Advisory Services (PLA — a wholly-owned subsidiary of PLF — will get merged with its holding company shortly).

While PL Capital Markets (PLCM) is in the process of obtaining Sebi licence to carry on investment banking business, PL Commodity Markets (PLCO) proposes to undertake commodities trading/brokerage business in the future. Officials added that the firm would also look at bringing in strategic partners in its step-down subsidiaries. The money from this placement would be used to expand the retail brokerage operations of the company. While officials said the company may consider a public offering in two years time, market sources pointed that it could be much sooner.

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