MUMBAI: Global banking major Standard Chartered Bank is set to take a 49% stake in UTI Securities from the Securities Trading Corporation of India (STCI) for around Rs 140 crore.
The deal will enable Standard Chartered to bolster its wealth management business in India in which it sees a tremendous growth potential.
“Standard Chartered has the option to increase its stake from 49% to 74% in 2008 and to 100% in 2009,” a source close to the development told PTI here on 28 May and added that ”the bank has more or less made up its mind to acquire the entire 100% stake.”
The total valuation of the deal works out to be around Rs 275-280 crore, the source said.
The deal is expected to be sealed in a couple of months and the name of the company will also undergo a change from the present UTI Securities.
For Standard Chartered, the acquisition of UTI Securities has several positives. ”In today’s market, Standard Chartered has the cream of customers and wealth management constitutes a huge and profitable cake for it,” the source said.
The bank has a cash rich clientele with majority of them being big players in the equity market but we were not providing them with broking facilities.
”The bank needed the transaction capabilities to own clients and UTI Securities will give this advantage. It thus makes tremendous sense from the consumer banking point of view to take over UTI Securities,” the source added.
On the institutional banking side, some of the top mutual funds bank with Standard Chartered. Further, the bank also distributes the mutual fund products of several MF houses.
”This business can now be transacted through UTI Securities. Globally too, several MFs, pension funds and FIIs bank with Standard Chartered and UTI can cash on these strong relationships effectively,” the source said.