JRG Sec to sell stake to Barings unit, shares fall

(Recasts lead, adds details)

MUMBAI, July 27 (Reuters) - Shares in stock broking firm JRG Securities Ltd. (JRGI.BO) surged on Friday morning on news it was selling a stake to a Barings unit, but fell 10 percent after the sale price proved to be lower than market price.

JRG said its board approved selling 44.8 percent stake for $35 million to Duckworth Ltd, a unit of Barings, through a preferential issue of shares and warrants. The deal valued the brokerage at nearly $78 million.

The issue would be made at 48 rupees a share, the company said. On Thursday, the shares had closed at 65.20 rupees in the Mumbai market and had raced to a life-time high of 71.70 rupees on Friday forenoon.

While JRG said in a statement the proceeds would be used to set up a non-banking finance company, its managing director, Regi Jacop, told reporters the funds would also be used to expand institutional broking business and branch network.

There would be an open offer from the investor, he said, but declined to specify details.

As per Indian regulations, an investor buying more than 15 percent of a company's shares must make an open offer to existing shareholder at the higher value between the purchase price and the six-month average.

((Reporting by Kaustav Roy and Virendra Verma, editing by S. Srinivasan; Reuters Messaging: virendra.verma.reuters.com@reuters.net; +91-22-6636 9299)) Keywords: BARINGS JRG/

(C) Reuters 2007. All rights reserved. Republication or redistribution ofReuters content, including by caching, framing or similar means, is expresslyprohibited without the prior written consent of Reuters. Reuters and the Reuterssphere logo are registered trademarks and trademarks of the Reuters group ofcompanies around the world.nBOM246370