Japan's largest brokerage house, Nomura Securities, is understood to have backed out of a deal to pick up a strategic stake in India’s leading brokerage, Enam Securtites.
Nomura, which has been negotiating with the promoters of Enam for the last few months, seems to have had differences over valuations.
“Nomura’s top management team came down from Tokyo to Mumbai last week and held final round negotiations with Enam officials. Nomura finally decided to withdraw," a source close to the development said. Officials from both Nomura and Enam were unavailable for comment.
With an eye on the booming Indian brokerage and investment banking industry, Nomura had earlier said it was in talks with Enam for a potential merger or a strategic stake. The Japanese firm's executive vice-president Hiromi Yamaji had told international news agencies that it was talking to Enam.
While issues over valuation could have pushed Nomura to abandon the negotiations, brokerage industry sources said the Japanese major was also not very sure about securing management control in the Indian firm. Vallabh Bhansali and Nemish Shah are the major promoters of Enam.
According to earlier media reprts, Nomura had agreed to buy a 35 per cent stake in Enam for Rs 1,400 crore, valuing the company at Rs 4,000 crore.
Nomura had also been in negotiations with UTI Securities for a potential buyout, though the talks failed. Sources said Nomura would now apply for an investment banking and retail brokerage license. The company plans to invest over $200 million for its foray into the Indian market.
Founded in 1984, Enam is one of the leading financial services firms in the country. The company offers IPO services, mutual funds, asset management services, investment banking, institutional equity broking and insurance broking.