Edelweiss buys Lalbhai's broking arm

Financial services company Edelweiss Capital has acquired the Lalbhai Group’s broking firm, Anagram Capital, for Rs 164 crore in an all-cash deal.

The deal, subject to regulatory approvals, will give Edelweiss more retail broking business as Anagram has a wide reach with 137 brokers and 1,300 sub-brokers catering to more than 180,000 clients.

For the nine months ended December 31, 2009, Anagram’s estimated revenue was Rs 100 crore. Its average equity trading volume is around Rs 800 crore per day.

Edelweiss said it intended to run Anagram as a 100 per cent subsidiary. Edelweiss Group Chairman Rashesh Shah said the acquisition was “in synch with Edelweiss’ plan to expand the retail broking business”. What made this transaction exciting was the minimal overlap between the broking operations of both, he added.

 

Anagram Capital CEO Mayank Shah said the transaction “is a win-win for Anagram clients and employees”.

“We are confident about our ability to bring together Anagram’s strong platform and Edelweiss’ unique research, technology and products,” he said.

The stock of Edelweiss Capital fell 2.63 per cent to Rs 438 on a day when the Sensex fell 2.92 per cent.

With this, the Gujarat-based Lalbhai group plans to focus on its core business of textiles. “The Lalbhai group’s core business is textiles. It is diversifying and since finance is not its core business, it decided to sell it,” said Shah.

In the late-1990s, ICICI had acquired Anagram Finance, another Lalbhai group company.

“Anagram is strong in retail and has a highly-professional management. Edelweiss has a huge institutional base and hence Anagram is a perfect fit for Edelweiss,” Shah said.

“This acquisition is in sync with Edelweiss’ plan to expand the retail broking business. We are already a leading institutional broking house and acquisition of Anagram with its reach and large, quality and diversified client base will give impetus to our retail broking and distribution businesses,” said Edelweiss Group’s Shah.

Anagram recorded an average daily business of around Rs 100 crore in commodities and Rs 150 crore in currency derivatives, Shah said. Anagram Capital’s entire team would be retained, he said, adding that “there is only a change in ownership.” Out of Anagram’s 137 branches, around 55 are in Maharashtra and Gujarat.

“Post-acquisition, our growth will be faster. We will focus on diversifying our product portfolio,” Shah said. On the anvil were services like portfolio management and more products in the wealth management segment, he said.

The company’s strategy over the next two years will be to expand in category B towns with a strong equity culture.