StanChart PE buys 2% more in M&M Fin Services

MUMBAI: Standard Chartered Private Equity has scaled up its stake in Mahindra and Mahindra Financial Services (MMFS) by 2% to 10% through open market operations. The PE investor has acquired 19.4 lakh MMFS shares in past four months. The MMFS stock closed flat at Rs 206.7 in a strong Mumbai market on Thursday. The market capitalisation of the company stands at over Rs 2,000 crore.

StanChart PE bought 4% equity in the Mahindra Group���s non-banking finance arm through subscription of preferential shares in February last year. MMFS had placed more than one crore shares for Rs 380 a piece, amounting to Rs 414 crore with StanChart PE and another foreign investor TPG-Axon.

StanChart PE���s additional investment has come at a time when flow of investments from private equity players have almost dried up. Analysts feel that there could be a long-term strategy, behind hiking the stake, as the MMFS��� vehicle financing business has a good potential in rural markets. ���We have not witnessed the same symptoms of urban pressure. While the first half will be good for our vehicle financing business, there will be a slower growth after May to August,��� said MMFS MD Ramesh Iyer. Currently, MMFS finances 60% of M&M vehicles and the balance non Mahindra vehicles.

In addition to Stanchart PE, a few other foreign investors, including TPG Axon and HSBC Global Investment Fund, hold a substantial stake in MMFS. The two shareholders owned 7.2% and 3.7% equity, respectively, out of the combined FII holding of 24% on December 31, 2008. The main promoter Mahindra and Mahindra owns a 60% stake.