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| Edited By: Vishwanath Nair,Nitin Shrivastava |Source: DNA |Updated: Mar 18, 2018, 05:28 AM IST
Axis, India’s third-largest private bank, is buying the financial services business of Enam Securities a third cheaper than originally envisaged.
Instead of a 5.7 Axis shares for one Enam share swap, the bank has eked out a more favourable 5:1 ratio.
As a result, Enam shareholders would be getting 12.30% lesser number of shares of the bank (1.209 crore shares instead of 1.378 crore shares earlier). That represents 2.926% shareholding in Axis Bank.
Also, with Axis’ share price taking a hit from over `1,500 in November 2010 to `1,103.25 on Friday, the total value of the deal has fallen nearly 35.5% from `2,067 crore to `1,333.35 crore.
The proposed transaction is subject to requisite regulatory approvals including high courts of Gujarat and Maharashtra and from the shareholders and creditors of the respective companies.
India’s third-largest private sector bank made this decision, “considering the prevailing market conditions and having regard to underlying commercial factors.” The bank had apparently received regulatory approval from the Reserve Bank of India (RBI) on March 31. This was after the bank’s board had approved the deal conditions in September last year.
As originally announced on November 18, 2010, the deal was to be all-stock, worth `2,067 crore, but RBI frowned at it.
According to the conditions set by the bank, Enam’s co-founder and chairman Vallabh Bhansali will continue in an advisory position at the fully acquired subsidiary.
Axis had gone back on its decision to induct Bhansali on the bank’s board, after RBI expressed its displeasure.
The Enam brand will continue to be used for the initial period, till a rebranding exercise is in place, said Somnath Sengupta, executive director and chief financial officer, Axis Bank.
Axis Bank also announced that it will sell 25% of the share capital in its wholly owned subsidiary, Axis Asset Management Company, to Schroder Singapore Holdings, a wholly owned company of Schroders. The deal is pending regulatory approval and is expected to be complete during 2012.
