Axis Bank buys out Enam arm
Axis Bank, the third largest private sector bank in the country, said on Wednesday that it will buy the investment banking and equities unit of Enam Securities for Rs 2,067 crore. HT Correspondent reports.india Updated: Nov 17, 2010 21:54 IST
Axis Bank, the third largest private sector bank in the country, said on Wednesday that it will buy the investment banking and equities unit of Enam Securities for Rs 2,067 crore.
Axis Bank managing director Shikha Sharma termed it as a ‘strategic fit and cultural fit’ for the bank.
As per the agreement, the four partners of Enam Securities — Vallabh Bhansali, Nimesh Shah, Manek Bhanshali and Jagdish Master — will get a combined shareholding of Rs 2,067 crore in Axis Bank, which is equivalent to 3.3% equity stake of the bank on its enlarged capital. The share swap ratio stands at 5.7 shares of Axis Bank for one share of Enam Securities.
Vallabh Bhanshali will also be inducted as a board member of the bank. Axis Bank will incorporate the acquired entity under a new subsidiary. Manish Chokhani will be its MD and CEO. Jagdish Master will be a board member of the wholly-owned subsidiary.
The deal will be completed over the next 4-6 months. Axis will get the integrated businesses, including the brand and people (around 400 employees). Enam has also entered into a non-compete agreement, where it will not enter into any of the businesses transferred to Axis Bank for a period of 5 years.
The deal has yet to receive the approval of the Securities and Exchange Board of India, Reserve Bank of India and the stock exchanges. The shares to be transferred to the four partners of Enam will have a statutory lock-in period.
“The statutory lock-in would be decided and imposed by Sebi and the stock exchanges,” said Vallabh Bhanshali, co founder and chairman, Enam Securities.
While Bhanshali said that there are no differences between the four partners, he said, “In Axis Bank we found the perfect fit and have chosen this path in order to provide greater value to our clients and greater opportunity of growth for our employees.” Enam registered revenue of R182 crore for the period between April 1 and October 31 and a profit before tax of Rs 77 crore.