CX Partners’ security deal hits regulatory hurdle

According to The Business Standard, the transaction has been deferred by the Foreign Investment Promotion Board (FIPB) four times. The news comes after a similar investment from OCS Group for Mumbai-based Central Investigation and Security Services was reportedly deferred several times. It recently received the green light.

Ajay Relan, founder and managing partner of CX, confirmed the proposal has referred to the Reserve Bank of India (RBI).

"There was no concern over the business model of SIS, which is involved in security management. Forty-nine per cent FDI (foreign direct investment) is allowed in the private security business in India, and CX Partners will acquire only 20%, which is far below the threshold," said a person close to the development, adding that RBI is looking into the transaction details between SIS and original investor D.E. Shaw.

Last August, CX signed a definitive agreement to acquire up to 26% in SIS through the purchase of a minority stake from from D.E. Shaw as well as buying new shares.

D.E. Shaw invested less than INR500 million in 2008 for a 14% stake in SIS, effectively funding the company's acquisition of United Technologies' Australian guarding and mobile patrol arm.

Founded in 1974 by Ravindra Kishore Sinha, SIS designs, develops and delivers security solutions include manned guarding of sites, secured transportation of cash, corporate investigation assignments and integration of electronic security gadgets. The company reported revenue of INR25 billion for the 2011-2012 financial year.

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• Topics
• South Asia
• Regulation
• CX Partners
• India