Galleon sells entire stake in Edelweiss

Galleon Group LLC, the US hedge fund whose founder Raj Rajaratnam has been charged with insider trading, sold its stake in India’s Edelweiss Capital Ltd, fetching Rs 2,600 crore ($56 million).

New York-based Galleon sold 5.27 million Edelweiss shares at Rs 485, according to the Bombay Stock Exchange (BSE). The holding was the company’s third biggest by percentage globally.

Galleon has been liquidating after Rajaratnam was accused last month in what prosecutors said is the largest hedge fund insider-trading ring ever charged. The company, with client assets of $3.7 billion, plans to return most of its clients funds “shortly after” November 30. Galleon earlier raised about $4.54 million by selling Indian investments.

Galleon held 7.02 per cent in Edelweiss, whose shares climbed 3.2 per cent to Rs 500.5 after the transaction. Rashesh Shah, Edelweiss chairman, and Venkatchalam Ramaswamy, an executive director, bought 2.8 per cent of the stock sold. Other buyers were Reliance Mutual Fund and Privatbank IHAG Zurich AG, according to the BSE.

Rajaratnam, 52, was one of six people arrested on October 16 for alleged insider trading and is free on $100 million bail. He started Galleon in 1997, and assets peaked at $7 billion last year. Rajaratnam has denied any wrongdoing.

Sanjay Santhanam, the former head of Galleon’s venture with Edelweiss, couldn’t be reached for comment and didn’t immediately return a voice message left at his Singapore office. Santhanam has quit the board of Edelweiss, according to the Indian company’s filing to the BSE on October 24.