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RBI asks UTISEL to hive off commodity broking arm

RBI asks UTISEL to hive off commodity broking arm
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First Published: Fri, Dec 14 2007. 06 21 PM IST
Updated: Fri, Dec 14 2007. 06 21 PM IST
PTI
Kolkata: The Reserve Bank of India (RBI) has asked UTI Securities Exchange Ltd (UTISEL) to hive off the commodity broking arm STCI Commodities Ltd within three months.
Sources close to the development told PTI that while RBI had cleared Standard Chartered Mauritius Ltd’s proposal to acquire 49% in UTISEL, it had also asked the securities broking arm to hive off the commodity platform.
STCI Commodities is a 100% subsidiary of UTISEL, which in turn is a wholly-owned arm of Securities Trading Corporation of India (STCI).
Stanchart Mauritius had entered into an agreement with UTISEL on August for picking up 49% in the latter. The RBI approval came few days back, sources said. The deal had been valued at Rs147 crore.
STCI sources said that since the apex bank had given three months time, various options were being weighed now on how to go about hiving.
One of the option was that after hiving off the commodity broking arm, STCI would bring it under its fold and operate it as its subsidiary.
Upon acquisition of 49%, Stanchart Mauritius would have the option to buy up to 75% in UTISEL in 2008.
Sources said, however, said this was a part of the agreement which both the parties had entered. “But this would again depend on various regulatory approvals.”
He said STCI would like to keep a residual stake in UTISEL even if Stanchart Mauritius enjoyed majority stakeholding in the company.
On the restructuring of UTISEL’s board post Stanchart’s entry, there would be four directors from the STCI side and three from Stanchart Mauritius.
Sources, however, said the managing director would be from Stanchart while STCI would appoint a non-executive chairman.
UTISEL would have to drop the UTI name from January 2008 since it was owned by UTI MF.
Post January, the company could be renamed as STCI Stanchart Securities.
“Nothing has been decided in that regard as of now,” sources said.
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First Published: Fri, Dec 14 2007. 06 21 PM IST