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Way2Wealth brews recipe for 2nd major acquisition

Raghuvir Badrinath  |  Bangalore 

Coffee Day’s arm plans to add 200 more locations by the end of this fiscal.

Way2Wealth is understood to be closing in on its second major acquisition, which is expected to cost around Rs 75 crore. It was only 10 months ago that the city-based wealth management and stock broking firm acquired Techno Shares & Stocks —for close to Rs 50 crore. That deal enabled it to scale up the network strength to around 600 locations. By the end of the current financial year, Way2Wealth is expected to add another 200 locations.

The Group’s boss, V G Siddhartha had vast acres of coffee estates in south-central Karnataka’s Chikmagalur, but it was with a stock broking firm that he chose to start off his professional career.

Thus came up J M Financial. Today, nearly two decades after that, Siddhartha, as founder-chairman of the 1996-founded Coffee Day Group, has found it having become Asia’s largest chain of coffee bars. These days, the man—with a master’s in economics — is in a hurry to expand Way2Wealth.

The management of Way2Wealth says it has a few targets, but is in no hurry to execute the deal. “The acquisition of stock broking business is complex,” notes Way2Wealth CEO Shashi Bhushan.

“While the outlets we own will be limited, the franchisees will expand our network. When you acquire, you need to be sure that the franchisees stay with you under the new management — and so do the customers. It is all about goodwill. One needs to ensure that this is retained in an acquisition.”

According to investment bankers close to Way2Wealth, the management is working overtime to target the country’s emerging rich class that is “craving” for attention.

“The focus for the second acquisition will be on the strata of people who have investment surplus in the range of Rs 50 lakh to Rs 2 crore,” according to a banker close to Way2Wealth. “Way2Wealth is understood to have zeroed in one such a wealth management & advisory company that has this segment as its sweet spot,” he told Business Standard.

Earlier this year, Way2Wealth had roped in Ambareesh Baliga, a well-known name in the Indian stock market, to spearhead its institutional and wealth management business.

In addition to expanding its footprint in the stock broking and wealth management sector, Way2Wealth is also understood to be in advanced stages of discussions to acquire an investment bank. For this, it is expected to shell out around Rs 200-300 crore.

Way2Wealth, as part of its expansion plans, recently got nod to raise a debt of up to $30 million from global private equity major KKR.

As another senior Way2Wealth official says, “We have drawn down around Rs 30 crore in the first tranche to widen our NBFC business, which lends to our clients in wealth management. As and when we require, we will draw further resources.” The loan book of this NBFC is around Rs 60 crore; it is expected to close the book at around Rs 100 crore by end of FY12.

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First Published: Mon, October 17 2011. 01:02 IST
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