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Enam Securities, Investment Advisory merges with Axis Bank
By siliconindia
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Friday, 19 November 2010, 01:58 IST
Bangalore: The merger of Enam with Axis bank in an all share transaction calls for 5.7 shares of Axis bank, for every one share of Enam securities and their shareholders will get 3.3 percent stake in Axis. This transaction has ensured the investment banking, institutional equities, retail equities, distribution of financial products, NBFC, etc, of Enam to Axis bank. Vallabh Bhansali says that they picked Axis Bank because of the cultural fit and 
2967 crore valuations.
As part of the deal announced, Enam Securities will demerge its investment banking, institutional & retail equities and related businesses such as distribution of financial products and non-banking financial company to a wholly-owned subsidiary of Axis Bank. The bank will also demerge its investment banking unit into the subsidiary. With this move, Enam has actually overcome all the rumors of being in talks with several international large investments banking franchisee like JP Morgan.
Enam's 400 people to be moving to the merged identity and the three hundred crore of net current assets comes under the tax of 92 crore in the last fiscal where the notable point is that in the fiscal year to date they have done, they have generated 72 crores. Taking an average of last year's profits and annualized earnings for the current year, its annual profits work out to around Rs120 crore.
Valuations apart, the deal offers good synergies. "We believe that there are significant synergies, negligible overlaps and a strong cultural fit between the two organizations," said Shikha Sharma, MD & CEO, Axis Bank. "We have a strong corporate banking and debt franchise, while Enam's strength is ECM (equity capital market)," she added. Axis Bank has the option of using the Enam brand for two years.
In 2010, Enam was ranked third in the Bloomberg league tables for domestic equity offerings. It helped 23 Indian companies rise more than Rs7, 200 crore, pegging its market share at 7.7 per cent. Only Citi and Kotak Mahindra Capital boast a higher market share.
While the Axis-Enam deal has been signed, final closure is expected to take up to six months, as regulatory approvals need to be obtained from the Securities & Exchange Board of India and Reserve Bank of India (RBI). The scheme will also require approvals from the high court's of Maharashtra and Gujarat.
Enam and Axis Bank will continue their respective 'buy side' and investment management businesses separately, as these do not form part of the transaction.
2967 crore valuations.
As part of the deal announced, Enam Securities will demerge its investment banking, institutional & retail equities and related businesses such as distribution of financial products and non-banking financial company to a wholly-owned subsidiary of Axis Bank. The bank will also demerge its investment banking unit into the subsidiary. With this move, Enam has actually overcome all the rumors of being in talks with several international large investments banking franchisee like JP Morgan.
Enam's 400 people to be moving to the merged identity and the three hundred crore of net current assets comes under the tax of 92 crore in the last fiscal where the notable point is that in the fiscal year to date they have done, they have generated 72 crores. Taking an average of last year's profits and annualized earnings for the current year, its annual profits work out to around Rs120 crore.
Valuations apart, the deal offers good synergies. "We believe that there are significant synergies, negligible overlaps and a strong cultural fit between the two organizations," said Shikha Sharma, MD & CEO, Axis Bank. "We have a strong corporate banking and debt franchise, while Enam's strength is ECM (equity capital market)," she added. Axis Bank has the option of using the Enam brand for two years.
In 2010, Enam was ranked third in the Bloomberg league tables for domestic equity offerings. It helped 23 Indian companies rise more than Rs7, 200 crore, pegging its market share at 7.7 per cent. Only Citi and Kotak Mahindra Capital boast a higher market share.
While the Axis-Enam deal has been signed, final closure is expected to take up to six months, as regulatory approvals need to be obtained from the Securities & Exchange Board of India and Reserve Bank of India (RBI). The scheme will also require approvals from the high court's of Maharashtra and Gujarat.
Enam and Axis Bank will continue their respective 'buy side' and investment management businesses separately, as these do not form part of the transaction.