Coffee Day Enterprises to sell brokerage business to Shriram Trust

Shriram Ownership Trust is the promoter of Shriram Capital, which is the holding company for its NBFC and insurance businesses.

Coffee Day Enterprises (CDEL) on Thursday said it has entered into a definitive agreement to sell its brokerage business ‘Way2Wealth Securities’ to Shriram Ownership Trust.

Shriram Ownership Trust is the promoter of Shriram Capital, which is the holding company for its non-banking financial company (NBFC) and insurance businesses.

“The transaction will help in further deleveraging the Coffee Day Group and ensure smooth operations while safeguarding the interests of all stakeholders,” said the company in an exchange filing.

Though the Bengaluru-headquartered firm didn’t reveal the enterprise value of ‘Way2Wealth Securities’, sources in the know said that the deal could be somewhere around Rs 200 crore. 

“It was a good decision to exit the broking business as it was not doing great. Earlier, VG Siddhartha (CDEL’s founder chairman) hired some top stock advisors but nobody stayed long enough to build the brand,” said a former top executive of Coffee Day Group.

After the demise of Siddhartha last year, the conglomerate has been facing liquidity crunch owing to higher interest outgo towards servicing debt.

To deleverage its balance sheet, the company had decided to sell the Global Village Tech Park to private equity major Blackstone and realty firm Salarpuria Sattva Group for Rs 2,700 crore in September last year. However, the deal is yet to close, pending approval from creditors.

By the end of July 2019, the group’s aggregate debt stood at Rs 4,970 crore, of which Tanglin Developments’ liabilities was at Rs 1,622 crore.

Its flagship coffee retailing arm Coffee Day Global’s total debt was Rs 1,097 crore.

The company, which is yet to announce its audited results for both the first and second quarters, has to declare the earnings by January 29. Failing to do so would prompt both BSE and NSE to stop trading in the company’s stock.

Meanwhile, promoter holding in CDEL has fallen sharply to 17 per cent by the end of the first week of January compared to 54 per cent in July last year.