Securities Trading Corporation of India (STCI), a primary dealer in government securities, will sell its entire stake in UTI Securities to Standard Chartered Bank in two years at a pre-determined price of Rs 275 crore, according to the memorandum of understanding (MoU) signed between both the parties.
The complete exit by STCI from UTI Securities at a nominal profit of Rs 10 crore after having payed Rs 265 crore to acquire the company from Specified Undertaking of UTI (SUUTI) showed that its decision to enter the retail broking business was a wrong move, said market players.
It is learnt that as per the terms of the MoU, Stanchart will buy 100 per cent stake in UTI Securities in three stages by 2009 for a total consideration of about Rs 275 crore. At a time when the domestic brokerages are attracting huge investments from private equity and foreign players, the UTI Securities deal showed that STCI could not add much value to the business during last one year.
Read more in The Business Standard article.
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