Axis Bank, the third largest private sector bank, on Wednesday announced the acquisition of the investment banking arm of Enam Securities for around Rs.2,067 crore
“It is proposed that Enam Securities will demerge its investment banking, institutional equities, retail equities and related businesses such as distribution of financial products, NBFC and the like to a wholly-owned subsidiary of Axis Bank pursuant to a scheme of arrangement. Axis Bank will also demerge its investment banking business into the wholly-owned subsidiary.”
Pursuant to the scheme, Enam shareholders will receive shares of Axis Bank in the ratio of 5.7 shares of Axis Bank for every one share held in Enam, resulting into about 3.3 per cent equity stake of Axis Bank on enlarged capital.
The proposed scheme is subject to approvals from the respective shareholders and approval from the authorities such as the Reserve Bank of India, the Securities and Exchange Board of India and the high courts of Gujarat and Mumbai.
The proposed transaction would create one of India's leading financial services powerhouses combining the investment banking and equities franchise of Enam Securities with the dominant debt capital markets and commercial banking franchise of Axis Bank.
The strategic objective is to create a complete bouquet of financial products and services for corporate, institutional and individual clients that will enhance the ability of the combined entity to better serve client needs in a seamless manner across product categories and geographies. With the Axis Bank's distribution platform of almost 1,100 branches and the Enam's retail network, the combined entity will have an unparalleled opportunity to build a dominant retail franchise as well.
The board of Axis Bank proposes to induct Vallabh Bhansali, Co-founder and Chairman of Enam, as an independent director, subject to approval from Axis Bank's shareholders and the RBI. Manish Chokhani would be the Managing Director and CEO of the newly proposed entity, while Jagdish Master will continue to provide guidance as a board member of the wholly-owned subsidiary.
“This merger is in line with Axis Bank's strategy of continuously expanding its product and service offerings to its customers to deepen its relationships and value differentiators,” said Axis Bank Managing Director and CEO Shikha Sharma.
“We are delighted at the prospect of combining forces with Enam Securities, a pre-eminent name in the investment banking and advisory field, to create an Indian financial services powerhouse at a time when India has occupied the world's centre-stage and is poised for years of rapid growth.
The model we are adopting has demonstrated its resilience and superiority globally. We are excited at the prospect of building on Enam's enviable reputation for bringing exciting new companies to markets and for its deep and long lasting relationships with corporate houses as well as with institutional and individual investors that have benefited from their services over the years.
We believe that there are significant synergies, negligible overlaps and a strong cultural fit between the two organisations. Enam's team is highly regarded in the markets and we look forward to welcoming them into the Axis Bank family,'' Ms. Sharma added.
