Mumbai: Securities & Trading Corp. of India (STCI) said it will set up new businesses ahead of an initial share sale, after separating its main operation as a primary dealer of government bonds on a central bank directive.
The company may go public in three years, Securities & Trading managing director G. Narayanan said in an interview, without specifying the amount it plans to raise.
Securities & Trading is looking at short-term lending to companies, private equity, margin lending for stock purchases, IPO funding and money-managing businesses, he said.
Securities & Trading, owned by a clutch of state-run finance companies, including State Bank of India, Bank of India and Life Insurance Corp. is turning to lending to avoid losses from trading in government bonds after the Reserve Bank of India raised its key interest rate seven times in two years.
“There’s no point doing business that has only market risk without spreading the risk profile,” Narayanan said. “That’s why we thought it best to bifurcate the primary dealership business, put it into a subsidiary and use the other fund for activities that do not have market risk.”
The company transferred its dealership to a unit after the Reserve Bank of India ruled its purchase of a brokerage barred it from continuing as a primary dealer.
STCI holds as much as Rs500 crore in cash after selling a stake in the brokerage to Standard Chartered Plc.
Securities & Trading sold 49% in its broking unit UTI Securities Ltd to Standard Chartered for Rs147 crore last week. It has the option to sell the remaining stake to the UK-based lender by 2010.
The firm also plans to start a mutual fund business with an overseas partner, Narayanan said, without giving more details.
Securities & Trading posted a loss of Rs13.56 crore in the year ended 31 March, having turned a profit of Rs24.26 crore the previous year.