Edelweiss looking to buy Anagram Capital

Edelweiss Capital, the Mumbai-based institutional brokerage, is conducting due-diligence of the books of Anagram Capital, a source familiar with the development said.

If all goes well, a buyout deal is likely to be announced in the next two weeks, the source said. Both companies, however, denied the development. “We have not had any
discussions with Edelweiss,” Mayank Shah, CEO of Anagram Capital, told DNA Money.
“We would not like to respond to market speculation,” said an Edelweiss spokesperson.
For some time now, Edelweiss has been looking for a larger footprint in retail broking, which is the forte of Anagram, a part of the Rs2,000 crore textiles major Arvind Lalbhai group.

Recently, Edelweiss named Kedar Deshpande, former head of retail broking at ICICI Webtrade Ltd to steer its business plans in the segment. Anagram, a privately held company, posted a net profit of Rs3.5 crore in financial year 2008-09 and Rs 18 crore in 2007-08. Edelweiss clocked a net profit of Rs65.07 crore in the second quarter ended September 30. Sanjay Lalbhai, who fully owns Anagram, has been trying to sell the business for around Rs225 crore, though suitors have offered around Rs120-280 crore at various times.

Broking house IndiaInfoline had nearly sealed a cash plus share swap deal in 2005 for around Rs120 crore, but the deal came apart at the last minute when Sanjay Lalbhai changed tack and insisted on an all-cash deal.

In 2007, Munesh Khanna, the former head of investment banking at Enam Securities and later with DSP Merrill Lynch, bought a 20% option in Anagram Securities for Rs33 crore through his private equity firm Halcyon Group, valuing the company at around Rs165 crore.

Halcyon had till December 2008 to exercise the option and buy the stake. Khanna was then named chairman of Anagram Securities. He merged the firm with Anagram Stockbroking, creating Anagram Capital. This brought the two stock broking cards —- of NSE and BSE held separately by Anagram Stockbroking and Anagram Securities, under Anagram Capital. Sources said Khanna had tried to sew up a sale with a UK-based fund for Rs280 crore but this, too, fell apart. Later, after the stock markets crashed and wallowed in 2008, Halcyon decided not to exercise its option and exited.