SBI Capital, SHCI enter race for IDFC Securities

The race to acquire the stockbroking arm of IDFC is heating up with bigger players such as SBI Capital Markets and Stock Holding Corporation of India entering the fray after the firm called a fresh round of bids, said three people familiar with the development.

In the first round, Equirus Capital, former Axis Capital managing director Dharmesh Mehta, InCred Finance and Vikas Khemani-led Carnelian Capital Advisors had made offers to buy out IDFC Securities, but some of them are said to have dropped out.

Most of the new bids have been pegged at around Rs 120 crore, said one person. At that level, IDFC Securities, which has institutional stockbroking and investment banking businesses, would be valued at one time the book value.


IDFC Securities is said to be expecting Rs 150 crore for the broking unit. The company posted sales of Rs 100 crore and net profit of Rs 23 crore in the year ended March 2018 for a net worth of Rs 169 crore.

SBI’s broking unit and Stock Holding Corporation submitted offers after the first round of bids were cancelled on the grounds that IDFC did not advertise the stake sale.

In the fresh round, InCred Finance is said to have withdrawn from the process. An email query sent to InCred’s founder Bhupinder Singh went unanswered.

IDFC Securities, SBI Capital and Equirus didn’t respond to queries.

While Stock Holding Corporation and Mehta declined to comment, Khemani said his firm did not submit bids the second time.

“Six bids have come in at the second round. Some of entities who were interested earlier have dropped out,” said one of the persons. The bidders are conducting due diligence and the board is likely to meet this month to discuss the proposed sale.

The acquisition of IDFC Securities could strengthen the institutional broking businesses of SBI Capital and Equirus. For Stock Holding Corporation, a buyout will pave the way for new business. Mehta had bid in his individual capacity in the first round when he was still managing director of Axis Capital. He quit Axis in early December. It is speculated that Mehta was backed by a firm that sold its large institutional stockbroking business some time ago, though this could not be independently ascertained.

IDFC, the parent entity, has to hive off the securities and mutual fund businesses as part of IDFC Bank’s merger with Capital First, a nonbanking finance company. The merger process will be completed by Decemberend. IDFC Securities has about 85 employees. IDFC had acquired the stockbroking and investment banking businesses from SSKI, promoted by Shripal Morakhia, in the last decade.

IDFC has been looking to sell its mutual fund and stockbroking businesses as part of attempts to divest its non-core units. A few large private banks were looking to acquire both units but those talks did not fructify. Earlier this year, the firm had been close to selling IDFC Mutual Fund to Avendus Capital, controlled by US buyout giant KKR.