Axis Bank to sell 25% in AMC to Schroders

Gets RBI nod to buy ENAM?s biz still needs high court okay

Axis Bank, the third largest private sector lender in the country, on Friday said it would sell 25 per cent stake in its asset management arm to Schroders, the largest asset management company (AMC) in Britain. The bank also said it had got the Reserve Bank of India’s approval to acquire the equities and investment banking businesses of ENAM Securities.

Shikha Sharma, managing director and chief executive of Axis Bank, said: “We are excited at the opportunity to partner with Schroders in building our asset management business. We look forward to collaborating with Schroders' distinctive product and global distribution franchise in the coming years.”

The bank did not disclose the deal value but said it was broadly in line with recent transactions in the domestic mutual fund industry.

Schroders' Asia-Pacific chief executive is to join the board of Axis Asset Management Company, while its Asia-Pacific chief operating officer will be inducted in the trustee company. The deal is subject to regulatory approvals and is expected to be completed in the next four to six months.

Sharma also said Axis Bank had got approval from the banking regulator on its proposed acquisition of ENAM Securities’ businesses on March 31. The deal structure has been slightly modified. ENAM's shareholders are to now get five shares of Axis Bank, instead of 5.7 as decided earlier, for every equity share of the broking firm. The bank said it still needed to get high court approval and expected the deal to be completed by the October-December quarter.

Axis Mutual Fund’s average AUM were Rs 8,815 crore for the quarter ended March 31. It ranks 15th among 44 MF houses in India. Schroders has assets worth £187.3 billion under its management.

In January, Nippon Life Insurance Company had acquired a 26 per cent stake in Reliance Capital Asset Management for Rs 1,450 crore. The Japanese life insurer valued the Indian AMC at 6.64 per cent of its total assets.

ENAM deal
Sharma also said Axis Bank had got final approval from the banking regulator on its proposed acquisition of ENAM Securities’ businesses on March 31. The deal structure has been slightly modified. ENAM's shareholders are to now get five shares of Axis Bank, instead of 5.7 as decided earlier, for every equity share of the broking firm.

"There was no regulatory guidance to relook at the valuation. However, we had the long stop date on June 30, 2012. Since the transaction will not be completed by that time and the market price has moved because of the environment, we decided to change it (swap ratio)," Sharma said.

The rest of the structure remained the same.

After the bank buys ENAM's businesses by offering its shares, it will sell the business to Axis Securities and Sales. The subsidiary will pay the bank around Rs 270 crore, which represents the book value of ENAM's businesses. Axis Securities and Sales will raise the money from the market.

The bank said it still needed to get approval from the high court and expected the deal to be completed by the October-December quarter.

Axis Bank will also retain the right to use the ENAM brand. ENAM’s co-founder and chairman, Vallabh Bhansali, will be an advisor to Axis Securities and Sales. He will not get a seat on the bank's board, as RBI had objected to that move.