Peregrine Securities Shuts Shop In India

Peregrine Securities India has decided to shut shop, ending nearly three months of uncertainty for the 70-odd staff employed here by the Asian investment bank.

Peregrine has thus become the fifth major foreign institutional investor to close down its India operations in recent months due to tough market conditions, the others being BZW, NatWest Markets, Deutsche Morgan Grenfell and ING Barings.

The India management yesterday announced at its Fort office in Mumbai that the outfit would close down all its operations. For all practical purposes, today could turn out to be the last day for most of the employees. Sources said a core team would be retained for a few days to oversee the liquidation process.

 

According to sources, the Indian employees will get their full pay for the past three months. No compensation is expected to be paid to the employees.

In an official statement, Peregrine Capital said, The board of Peregrine Capital India met this morning, having learnt that the efforts of its parent company to seek a buyer were not successful. The board discussed the options available and decided that it would be in the best interest of PCI shareholders to conduct a wind-down of its operations over the next few months. The company is solvent and will pay its debt in full.

The decision to close down operations resulted from the view of the liquidator, Price Water-house, that the price bid by the only serious bidder, Banque National de Paris, was too low.

Business Standard had earlier reported that the future of Peregrines India operations was uncertain owing to the liquidators dissatisfaction with BNPs bid price.

While Peregrine Capital and Peregrine Securities will wind up operations, the brokerage firm of Peregrine Swastik (a Madras Stock Exchange member), a 40 per cent affiliate of Peregrine Capital, will continue to function normally.

Coming as it does on the day when the BJP and its allies declared their national agenda, the shut-down announcement may well strengthen the rhetoric of nationalistic forces.

The crisis had broken out three months ago when the parent company the Hong Kong-based Peregrine Holdings went into receivership. Subsequently, a bail-out package by Zurich Central Investment fell through, plunging both the parent and the Indian outfit into crisis.

In December 1997, Peregrine Indias book value stood above par, having wiped off its December 1996 accumulated losses of about Rs 12 crore.

Peregrine Holdings held a 75 per cent stake in Peregrine India, which had a capital base of Rs 78 crore. The other shareholders were Hathaway Investments, Thermax and IL&FS.

Banque Nationale de Paris was reportedly the only prospective buyer to show interest in Peregrine India. KPMG had conducted an appraisal of Peregrine India for a week but never got back to the receiver in Hong Kong on the issue.