MUMBAI: A split between the New Zealand-based Chandler brothers Richard and Christopher has been triggering a string of block deals in the Indian stock market.
In recent sessions, the market has seen large block deals in financial services scrips - ICICI Bank, HDFC, HDFC Bank and UTI Bank.
Both the brothers under Sovereign Global have investments of around $2 billion in the Indian market. They had started investing since 2005 and were one of the largest portfolio investors in 2005 with investments of around $1.2 billion. They have been investing in the market through Crown Capital, a Sebi-registered FII sub-account, and an affiliate of the Sovereign Global Investment Group. Over the past 20 years, Sovereign had invested in markets like Hong Kong, Brazil, Russia, Japan and South Korea.
Post the split between the two brothers, which came into effect from December 1, Richard Chandler will lead Orient Global while Christopher Chandler will lead Legatum Capital. Both the brothers have divided their holdings equally across the globe. In India, Sovereign's investment vehicle Crown will be passed on to Legatum. The block deals which happened in the past couple of weeks was due to the transfer of half the stakes which Crown had to Orient Global. Currently, these stakes are being held by brokerages, UBS Securities and CLSA.
In India, Sovereign has built up stakes of shade less than 5% in ICICI Bank, HDFC, HDFC Bank, UTI Bank and Indiabulls Financial Services, an NBFC. According to Legatum Capital president Mark Stoleson, "Legatum Capital is one of the largest portfolio investors in India. Through our predecessor Sovereign Global, we have been committed to supporting the Indian market and its flagship companies for the past two years.
Legatum Capital has invested a substantial amount of capital in India's financial services sector. Legatum demonstrates its continued commitment to India and the Indian capital markets by becoming the sole owner of Crown Capital, its investment vehicle in India."
Unlike other portfolio investors, Sovereign has been investing the personal wealth of Chandler brothers in different markets across the globe. Says Mr Stoleson: "Legatum Capital is unique because we are privately held and invest only proprietary capital. This allows us the freedom to commit and take a long-term view, which we have demonstrated in India over the past two years. For example, when the markets turned volatile in May and June 2006 even as other portfolio investors sold shares, we did not sell a single share from our portfolio."
What excites us about India is that the country is in an economic transition of epic proportions and there is no going back." The brothers, who had started their investments with around $10 million of family fortune 20 years ago, is now said to have investment of around $6 billion across the globe. For instance, in 2003, Sovereign had picked up a 14.99% in SK Corp, South Korea's biggest refinery for around $168 million.
Early this year they sold the stake for around $1 billion. During end 2002, the brothers had picked up stakes worth over $1 billion in a host of banks in Japan like UFJ Holdings, Mizuho Financial Group, Sumitomo Mitsui and Mitsubishi Tokyo Financial at a time when most of the banks were in a bad shape. They are said to have made profits of over $2 billion and still continue to have stakes in Mizuho.
Sovereign, internationally had earned the tag of being secretive and reclusive in their investments even as they have fought with companies on corporate governance standards like in the case of SK Corp. In India, Legatum is also said to be looking at other sectors to invest. Says Mr Stoleson, "Legatum Capital is a global investor that seeks extraordinary investment opportunities without regard to sector or geography. Over the past 20 years, Legatum Capital has developed circles of competence in electric utilities, oil and gas, telecoms, real estate and financial services."
Source: The Economic Times
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