Essel Group to buy majority stake in LKP Finance

Media baron Subhash Chandra’s Essel Group has planned to acquire a majority stake in Mumbai-listed non-bank lender LKP Finance Ltd.

Dakshin Mercantile Pvt. Ltd, an Essel Group company, signed a pact to acquire a stake of up to 62% in LKP Finance for as much as Rs 154.3 crore (around $23 million), according to a stock-exchange filing.

Dakshin Mercantile has also made an open offer to LKP’s public shareholders to acquire up to 26% more.

In keeping with regulations, Dakshin Mercantile has filed for an open offer subject to approval from Securities and Exchange Board of India and Reserve Bank of India.

LKP Group is in the business of lending, and investment and trading in shares and securities.

As of 31 March 2018, the promoter group held 64.26% stake in LKP Finance, stock exchange data showed.

Mahendra Doshi, executive chairman of LKP Finance, “In line with a long-term vision to grow our security business we have decided to sell our stake in LKP Finance.”

The company’s share price stood at Rs 170.85 at the close of trade on Monday with a market capitalisation of Rs 212 crore.

Dakshin’s offer is to buy LKP shares at Rs 198 apiece subject to customary approvals.

As per the deal, Amitabh Chaturvedi, a Dakshin Mercantile board director, will join the board of LKP Finance as a representative of the Essel Group. Chaturvedi is also managing director of Essel Finance, the financial services arm of the Essel Group.

“This [deal] is a part of the long-term strategy to get a listed platform for our holding companies,” said Chaturvedi. “We believe this will aid our growth plans in the financial space and help to establish us as one of the leading financial companies in India.”