India's third-largest private sector bank Axis Bank on Friday announced that its board has approved the transfer of Enam Securities' investment banking and equities businesses to self, which will be eventually sold to the bank's wholly owned unit Axis Securities and Sales (ASSL) for Rs274 crore.
As per the approved scheme, Enam shareholders will get 5.7 shares of Axis Bank for every share held in the company. "Enam shareholders will be issued 13.7 million shares on the basis of the agreed swap ratio of 5.7 shares of the bank for every one share of Enam," a statement by the bank said.Last year, Axis Bank had said it will buy the two units for $456 million (Rs2,165 crore) in an all-stock transaction, but regulatory hurdles prevented the acquisition to take effect.
The structure, announced on Friday, broadly retains the original deal contours, but now involves a cash payout to Axis Bank from its own unit for transferring Enam's businesses.
"It's an accounting treatment mainly to comply with the regulations," said a senior official at Enam Securities on the condition of anonymity. "There is no structural changes to the deal, which we had announced earlier."
RBI had in April given an in-principle nod to the deal but had asked the bank to revise its scheme of accounting and structure for the new business.
{{/usCountry}}RBI had in April given an in-principle nod to the deal but had asked the bank to revise its scheme of accounting and structure for the new business.
{{/usCountry}}It had also stipulated that no shareholder of Enam Securities acquiring shares of Axis Bank under the scheme of arrangement would be eligible for being a director on the board of the lender.
With agency inputs