US fund picks up 42.5% stake in Indiabulls arm for $30 m

US-based investment fund Amaranth LLC and its affiliates have picked up 42.5 per cent stake in Indiabulls Finance Co Pvt Ltd, a subsidiary of Indiabulls Financial Services Ltd, by investing $30 million.

Indiabulls retains 57.5 per cent stake in Indiabulls Finance and will continue to control all day-to-day operations of the subsidiary. In light of this deal, the valuation of Indiabulls Finance comes to more than $70 million.

"This transaction makes Indiabulls a greater force in IPO distribution as we look to expand in this fast-growing sector and provide additional products and services to our existing and new clients," said Sameer Gehlaut, chairman and chief executive, Indiabulls.

"We look forward to boosting our robust business and leveraging the large existing network of Indiabulls Financial Services," he added.

The cash infusion from Amaranth gives Indiabulls Finance a capital base of $40 million of equity capital and will be used to make technology and infrastructure investments in the business, he said.

The company plans to add retail outlets during the next year for disbursing loans to its target market.

Amaranth LLC, Greenwich, Connecticut, is a multi-strategy investment fund managing more than $6.5 billion of equity capital in public and private equity investments, credit arbitrage, energy trading, capital structure arbitrage and convertible arbitrage.

In December 2004, Farallon Capital of San Francisco paid $20 million for a 33.3 per cent stake in Indiabulls Credit Services Ltd, which offers personal loans and home mortgages for mid-market customers.

The parent company, Indiabulls Financial Services Ltd, recently concluded its global depositary receipt program, issuing one equity share for one GDR at $2.45 and raised $60 million of equity capital. The GDR issue was oversubscribed five times and investors included Fidelity, HSBC, J P Morgan, Goldman Sachs and Sloane Robinson.

According to the National Stock Exchange website, foreign shareholding in the company as of March 31, 2005, was 55.71 per cent.