Birla Nuvo to buy 56% stake in Apollo Sindhoori Capital for Rs 198 crore

Aditya Birla Nuvo, a part of the Aditya Birla group, on Thursday said it would acquire 56 per cent stake in the Chennai-based stock broking firm, Apollo Sindhoori Capital, for Rs 198.81 crore, valuing the latter at Rs 355 crore.

The board of directors of AB Nuvo at its meeting on Thursday approved the acquisition of the more than 3.1 equity shares of Apollo Sindhoori, the company said in a filing to the Bombay Stock Exchange.

The purchase of the equity shares would be concluded upon completion of the mandatory open offer under Sebi regulations. The company’s stock price on Thursday rose by 9.54 per cent to close at Rs 58 on the National Stock Exchange.

The Aditya Birla group already has a presence in mutual funds and insurance and this deal marks the group’s return to the stock broking business.

In 2003, the Birlas had exited the stock broking business by selling Birla Sun Life Securities, a joint venture between the Aditya Birla group and the Sun Life Group of Canada to the JV Gokal Group.

Ajay Srinivasan, chief executive, financial services, Aditya Birla Group, said, “The strategic intent of this agreement is to position Aditya Birla Financial Services Group as a broad based and integrated player in the financial services business. We already have a strong presence across financial services verticals, including life insurance, fund management, distribution and wealth management, security-based lending, insurance broking and private equity. Apollo Sindhoori Capital Investments offers us a well established platform with a capable team that will integrate well into our existing business and further strengthen our presence in the financial services space.”

Promoters of the stock broking firm, Apollo Hospitals Group, has retained 10 per cent stake in Apollo Sindhoori Capital after the stake sale.

Justifying the retention of a minor stake in the company Apollo Sindhoori Director Suneeta Reddy said, “We have chosen to retain a 10 per cent stake as we believe the Aditya Birla Group will add substantial value to the company.”

Apollo Sindhoori has a distribution network of over 190 own and 570 franchisee branches, which will increase the reach and accessibility for the group’s financial services products, a release from the Aditya Birla Group said.

The 150,000-large customer base is expected to help the group sell other products it has before this acquisition.

Apollo Sindhoori had reported a topline of Rs 120 crore, a net profit of Rs 22 crore in 2007-08.

Public shareholding in the company is 33.68 per cent at the end of the first quarter ended June 30, 2008.