Enam staffers to get retention sweeteners

Barely weeks after selling the core businesses of Enam, the capital market intermediary, to Axis Bank, veteran deal maker Vallabh Bhanshali is busy devising a reward package for about 450 employees.

The private sector lender last month bought Enam’s investment banking, equity broking and insurance distribution businesses, to be housed in its wholly-owned unit, Axis Securities and Sales. The deal has to be approved by the Reserve Bank of India and the Securities and Exchange Board of India. Analysts expect the deal to be completed within six months.

In the all-stock deal, worth Rs 2,067 crore, 90 per cent Axis shares will go to Enam’s promoters/shareholders. The remaining 10 per cent will go to the Enam employees’ trust.

Under the deal, the onus is on Enam to work out a package for its employees in order to retain them. For, investment banking and broking are people-centric businesses and loss of top talent can have a serious impact on the business, say analysts tracking the sector.
 

TO STAY ON

* Top 10-15 Enam executives may get Axis Bank shares worth 4-5 times annual CTC 

* Another 40-45 senior officers may also get Axis shares, based on rank and experience

* Junior-level employees may get retention bonuses worth 1-1.5 times annual CTC 

“There is minimal overlap between Axis Bank and the businesses it has acquired from Enam,” said a banking analyst with a Mumbai-based brokerage who wished not to be named. “Axis will obviously like to retain as many employees as possible.”

According to people familiar with the matter, 50-60 senior-level executives in Enam will get shares worth Rs 206 crore, with a lock-in period of three years.

Of this, the top 10-15 officials might get Axis Bank shares worth four to five times their annual cost-to-company (CTC), they said. These officials may include the firm’s investment banking head, S Subramanian, and equities head Dharmesh Mehta. Another 40-45 senior executives are likely to get Axis Bank shares, based on rank and experience.

Junior-level employees, such as those in back-office and accounts, may get retention bonuses worth 1-1.5 times their annual CTC, with payouts after certain intervals.

Vallabh Bhanshali, chairman, Enam said, “It is a unique scheme to reward our employees. While deciding it, we will consider several factors, including rank and experience.” He declined to elaborate further on the reward scheme, citing legal constraints. Meanwhile, an Axis Bank spokesperson said, “We will do everything to retain employees.”

The swap ratio of 5.7 shares of Axis for every share of Enam translates into a 3.4 per cent stake for Enam’s promoters in Axis, with a lock-in period. After the deal, Enam Chairman Bhanshali will get a seat on the Axis Bank’s board as an independent director. Manish Chokhani, director of Enam, will be the CEO of Axis Securities. Jagdish Master, one of the Enam co-founders, will be on the board of Axis Securities. Enam employees would shift to an office tower in the Bombay Dyeing Mills compound in Worli (Mumbai) in the next three to four months, an official said. Axis Bank, which bought this property in May this year, is going to shift its corporate headquarters there from Cuffe Parade in South Mumbai.