Burmans partner with China's fourth largest brokerage house

Haitong Securities India makes provision for moreinvestment; increases authorized capital three times

Tata group is not the only Indian conglomerate to have partnered with a Chinese bank. A recent filing with the Registrar of Companies reveals that the Burman family — promoters of Dabur India — have formed a similar partnership with Haitong Securities, fourth largest brokerage firm in China.

Recently, Shanghai-based Haitong Securities, valued at $21 billion, set foot into India by acquiring Portuguese lender Espirito Santo. The Burmans owned a 25% stake in the firm’s domestic business. After the acquisition, it got a new name — Haitong Securities India.

In a recent filing with the RoC, the company declared, “The name of the Company was changed from Espirito Santo Securities India Private Limited to Haitong Securities India Private Limited vide Special Resolution passed by Shareholders at their Extra-Ordinary General Meeting (EGM) held on November 17, 2015.” The shareholders also approved the proposal to increase the authorized capital of the company by over three times to Rs 20 crore.

This marks Burmans’ second entry into capital market business. In November 2011, Burmans, who had interests in life insurance (with Aviva Life) and in Fidelity Mutual (sold off to L&T), picked up the minority stake in Espirito Santo Securities India. Group scions Mohit Burman and Gaurav Burman were inducted into the board. However, three years later, Banco Espirito Santo, the mother ship, ran into regulatory troubles. An investigation in Portugal led to arrest of some of the promoters of the parent firm.

In December last year, Novo Banco, the “good bank” created out of collapsed Banco Espirito Santo, announced that China’s Haitong Securities has agreed to pay €379 million ($465 million) for its investment banking arm.

Following this, several leadership changes took place in the Mumbai-based firm. Filings showed that Mohit Burman stepped down from the board in June. Tara Chemlyn Jones, London-based managing director of the investment banking division, has also resigned. Nick Paulson Ellis, the company’s first CEO, had resigned two months before the Haitong deal. Now, senior investment banker George Mathew is heading the India business. However, Gaurav Burman continues to be on the board.

Haitong currently has operations in the investment banking space. It plans to expand into the institutional trading business soon.

Last week, Reuters reported Haitong was being probed by the China Securities Regulatory Commission (CSRC) for alleged violations of securities regulations. On Wednesday, Reuters quoted Haitong Chairman Wang Kaiguo telling a financial conference that the company was carrying out reforms in line with the CSRC regulations.

On Wednesday, Tata Sons declared the world’s largest lender Industrial and Commercial Bank of China as its strategic banking partner.
SECOND COMING

• Nov 2011: Burmans buy 25% stake in Espirito Santo India through MG Burmans Capital Advis
   
• Jun-Jul 2014: Espirito Santo runs into trouble in Portugal
   
• Aug 2014: Espirito Santo split into Good bank and bad bank
   
• Dec 2014: The Investment banking division which came under good bank sold to Haitong Securities
   
• Nov 2015: Name of local arm changed to Haitong Securities, authorised capital hiked three times.
   
• Nov 2015: Haitong among several brokerages under probe in China