The Axis Bank board will meet tomorrow to vet the revised proposal of a merger of select businesses of Enam Securities.
The merger of Enam's investment banking and broking businesses with the private sector bank was announced last November, but the contours of the deal was re-worked due to regulatory obligations. With the revised merger plan approved by the Reserve Bank of India, the bank's board needs to lend its seal for the deal to go through.
According to the deal, Enam shareholders will get 5.7 shares of Axis Bank for every share held in the broking company. In other words, Enam shareholders will get 3.3 per cent stake in the bank on an enlarged capital. The deal value is estimated to Rs 2,067 crore. The deal structure also entails Enam to de-merge its equities and investment banking businesses into a wholly-owned subsidiary of Axis Bank. The bank would de-merge its investment banking business into the subsidiary.
While giving its in-principle approval for the transaction in April, the central bank had also specified certain conditions, which could have increased the bank's tax burden.
As a consequence, the bank wrote to the RBI, seeking "certain modifications" in the terms and conditions specified. The terms specified by the RBI included a revised scheme of accounting and change in the eventual structure of the business proposed to be acquired.
RBI had also stalled Axis Bank's plan to induct Vallabh Bhansali, co-founder and chairman of Enam, as an independent director on the bank's board.