Asian private equity firm PAG’s potential sale of its controlling stake in Nuvama Wealth Management Ltd. has slowed down amid valuation concerns following an investigation of Jane Street Group by India’s stock market regulator, according to people familiar with the matter.
While sale considerations are ongoing, a transaction might be delayed as bidders including buyout firms and industry players need more time to evaluate the impact of the Jane Street case on Mumbai-listed Nuvama, the people said, asking not to be identified because the deliberations are private. Nuvama is the local trading partner of Jane Street.
Talks with prospective bidders are ongoing and no final decisions have been made, the people said. PAG may also explore other options for its 54% holding in Nuvama, including a placement or a continuation fund, they said. The private equity firm could also decide against pursuing a deal at this point in time, they added.
A representative for PAG declined to comment, while Nuvama didn’t respond to requests seeking comment.
Nuvama shares have dropped roughly 7% this year, giving the company a market value of around $2.6 billion.
Blackstone Inc.-backed PAG was working with financial advisers on a strategic review of its stake in the Indian wealth manager that could result in a partial or full sale, people familiar said in February.
Nuvama has come under a cloud in recent weeks. The company said in July that India’s income tax officials were conducting a survey at its office in Mumbai and that it was extending “full co-operation” and sharing “requisite information” with the authorities. The visit was linked to an ongoing investigation by the regulator into alleged market manipulation involving Jane Street, according to people with knowledge of the matter.
No regulatory and legal proceedings were pending against Nuvama regarding the Jane Street-related investigation, according to a July 4 filing with the country’s stock exchange, following a report in the Economic Times.
The Securities and Exchange Board of India, known as Sebi, temporarily barred Jane Street from dealing in local securities, on allegations of manipulating an index of bank stocks to benefit its derivatives positions. The US proprietary trading firm has denied the claim. Sebi later lifted trading curbs on Jane Street following the firm’s compliance with an order to deposit 48.4 billion rupees ($550 million) in an escrow account.
Last week, Jane Street filed an appeal in an Indian court, alleging that Sebi denied it access to crucial documents needed to defend against market manipulation accusations.
Analysts at Jefferies Financial Group Inc. wrote in a note that Jane Street could be an “important client” for Nuvama, with a 15% to 20% share of its asset service business. The US investment bank saw an impact of as much as 8% on Nuvama’s earnings due to the regulatory crackdown.
Nuvama provides wealth, asset management, capital markets and advisory services, according to its website. Its clients include entrepreneurs, founders, high- and ultra-high-net-worth individuals, companies and institutional investors.
PAG invested about $325 million for a controlling stake in Nuvama, formerly known as Edelweiss Wealth Management, in 2021.
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