Axis Bank buys Enam's i-bank arm for Rs 2,067 cr

Private sector lender Axis Bank today announced acquisition of investment banking arm of Enam Securities for Rs 2,067 crore.

The deal comprises investment banking unit, corporate advisory services and equity distribution arm of Enam Securities. Asset management company and insurance broking arm are not part of the deal.

"We believe this is a great strategic fit...Great cultural fit," Axis Bank Managing Director Shikha Sharma told reporters here.

"The consideration (for the deal) is Rs 2,067 crore paid in stock of Axis Bank," she said, adding that it is subject to regulatory clearance from the Reserve Bank of India and the Securities and Exchange Board of India.

Axis Bank is one of the leading private sector lenders of the country with a network of about 1,000 branches spread across the country.

Enam Securities, which was set up in 1984 as a financial services services provider, is a privately held company.

As per the merger agreement between both the entities, Enam Securities will demerge its investment Banking, institutional equities, retail equities and related businesses such as distribution of financial products, NBFC, etc to a wholly-owned subsidiary of Axis Bank, Sharma said.

Axis Bank will also demerge its investment banking business into the wholly-owned subsidiary, she added.

As part of the agreement, Enam shareholders will receive 5.7 shares of Axis Bank for each Enam share.

This would result into about 3.3 per cent equity stake of Axis Bank on enlarged capital.

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 bank said in a statement.

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, it said.

With Axis Bank's distribution platform of almost 1,100 branches and Enam’s retail network, the combined entity will have an unparalleled opportunity to build a dominant retail franchise as well, it added.

The board of Axis Bank proposes to induct Vallabh Bhansali, the co-founder and chairman of Enam, as an independent director, subject to approval from Axis Bank's shareholders and the RBI, it said.

Manish Chokhani would be the managing director and chief executive officer of the proposed entity, while Jagdish Master will continue to provide guidance, as a board member of the wholly-owned subsidiary.

Commenting on the proposed merger, Sharma said this merger is in line with the bank's strategy of continuously expanding its product and service offerings to its customers in order to deepen its relationships and value differentiators.

Enam Securities Chairman Vallabh Bhansali said: "We have built Enam as a knowledge based, client focused, pure agency business that has helped us in retaining core values and quality while delivering some landmark deals to the country."

In Axis Bank, he said, "We found the perfect fit and have chosen this path in order to provide greater value to our clients and greater opportunity of growth for our employees."

Enam's shareholders have demonstrated their confidence in the combination by their acceptance of Axis Bank shares in exchange of their ownership of the painstakingly built investment bank, Bhansali said.