The domestic share transfer and registrar industry is facing a major restructuring with three leading global players in the share transfer/custodial business the US-based State Street Bank, Canada-based Montreal Trust and the UK-based Lloyds Bank Registrar showing keen interest in picking up equity stake of Indian agents.
The representatives of these companies have already held preliminary talks with leading domestic players, including MCS and Karvy Consultants.
According to industry sources, the global players are eager to forge a tie-up, form a joint venture, or pick up an equity stake in the Indian companies. They would benefit from the fact that these Indian outfits have a strong retail network and a large client base.
A representative of Montreal Trust, William E Brolly, recently visited India and met officials at MCS and Karvy Consultants, apart from other smaller share transfer agents.
While talks have yet to be finalised, sources said that an equity stake of 30-40 per cent in the Indian companies looks a possibility.
The foreign players have also made it clear that they are not interested in buying out the operations here. The Indian players will benefit from the latest technology from foreign players.
With the primary markets in doldrums, the registrars have been going through a tough time, and will be actually looking for equity infusion.
Only 50 of the 350 registered share transfer agents (with the Securities and Exch-ange Board of India ) are actually operating at the market.
Industry sources say that during preliminary negotiations, the foreign share transfer agents expressed concern at the inadequate levels of modernisation and lack of computerisation in the works of the Indian players.
This and the large number of employees in the Indian organisations are perceived as major hurdles in the negotiations.
The Rs 80-crore Indian industry has three major players MCS, Karvy and Share Pro. Of this nearly 25 per cent of the business is handled by MCS with nearly 15 million accounts. Karvy has close to 15 million investors. The third largest player, Share Pro, has close to 50 lakh folios.
Karvy currently has an on-going venture with FII Jardine Fleming in which the latter holds a 29 per cent stake.
Various companies with in-house share transfer departments have also decided to spin off their divisions or give it to other share transfer agents. Recently, Procter & Gamble, which earlier had in-house share transfer, has decided to give this responsibility to MCS.
Siemens India and Hindustan Petroleum Corporation (HPCL) have also decided to hand over the share transfer responsibility to MCS.
Industry sources say companies are handing over the share transfer division to the professionally run outfit as a cost-cutting measure.
State Street Bank is amongst the largest share transfer/custodial agencies with a presence in over 93 countries.
The headquarters of the company is at Boston and its European operations are controlled from London. It also has a joint venture with the Unit Trust of India for managing funds.
State Street Bank controls over 70 per cent of the US business and has plans to expands its Latin American operations. The company services close to 35 million accounts.
