TD Waterhouse to invest $15 million in Tata Securities joint venture
(Tuesday, December 14, 1999)
Our Banking Bureau in Mumbai-BS
TD Waterhouse has decided to invest around $15 million in the joint venture with Tata Securities which is likely to be announced by the end of this month.
The joint venture envisages on line trading in the secondary market whereby TD Waterhouse, subsidiary of Toronto Dominion Bank, will hold 49 per cent stake in Tata Securities while the balance will be owned by Tata Finance.
The joint venture company will be named Tata Finance TD Waterhouse and the memorandum of understanding for the joint venture was signed during October end, this year.
Meanwhile, PricewaterhouseCoopers Ltd has been appointed for the due diligence and valuation of share price. At the same time, international consultant KPMG Consultant has been appointed for projecting the business plan for the next five years for the newly formed company.
The new venture will see Tata Finance TD Waterhouse taking buy-sell orders directly on the Internet. The company is currently in talks with Securities and Exchange Board of India, seeking their nod for the new business venture.
According to Stephen McDonald, chief executive officer of TD Waterhouse, "The trading volumes are expected to go up with on line trading which has been the case in the other countries."
He said that in the US market 20 per cent of the total retail trades are on line which is expected to grow further. "The TD Waterhouse has 12 per cent market share in US and 80 per cent of the total volume it handles are on line trades," said McDonald.
McDonald pointed out that in case of India, the constrain would be that of number of net users being less as compared with developed nations and that all securities are not demat, which is a pre-requisite for on line trading.
However with around 50 per cent of the total settlement volumes take place is demat which is a large market.
Currently the paid up capital of Tata Securities, which is a subsidiary of Tata Finance, is Rs 50 crore is likely to go up to nearly Rs 70 crore following equity restructure. "The payment to Tata Securities is expected to be in two tranches, since some part of it would be disinvestment and some of it would be fresh equity. However, details are yet to be worked out," said sources. |
