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The fate of private equity firm General Atlantic’s 74 per cent stake in Karvy Computershare and the deal of Warburg Pincus to buy a stake in Computer Age Management Services (CAMS) hinges on the recommendations of the SEBI-appointed committee set up to look into the road-map for key market infrastructure companies.
The committee led by former RBI deputy governor R Gandhi will go through a presentation by both Karvy and CAMS this week before they classify them as important market infrastructure institutions (MIIs).
“If both CAMS and Karvy are classified as MIIs, then it would be difficult for private equity players to own more than 5 per cent stake in them as they will have to follow rules that are applicable to other such companies like the stock exchanges,” a source told BusinessLine . Already, there is a view within SEBI that PE players should not be allowed to hold controlling or even substantial stake in companies such as CAMS and Karvy as they are sitting up on a treasure trove of data related to stock market and mutual fund participants, experts said. MFs have expressed concerns over data security and increased costs associated with the entry of PE and venture capital funds in such institutions.
Warburg’s attempts
The New York-based PE fund Warburg Pincus has been making persistent attempts at buy a stake in CAMS. Last year, it was in talks with the NSE and other shareholders to buy a 49 per cent stake. This year again, it has revived talks with HDFC to buy its 5.1 per cent stake. But SEBI has not allowed any deal to be finalised as yet. NSE Strategic Investment Corp, a subsidiary of NSE, owns 45 per cent in CAMS, while HDF Group and Acsys hold 20 per cent and 35 per cent, respectively.
General Atlantic acquired 74 per cent in Karvy Computershare for about ₹1,500 crore in August 2017. Karvy Computershare, promoted by the Karvy Group and Australian share registry Computershare, controls about 40 per cent market share in India. General Atlantic plans to raise its stake by another 10 per cent, a source said.
Both CAMS and Karvy are data processing and transfer agents for MFs and equity market participants. They mainly have captive data of statement of accounts, payment credits and delivery instructions, among others, of all the domestic investors.
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