Mumbai: India’s third largest brokerage by market value, Edelweiss Capital Ltd, has agreed to buy retail broker Anagram Capital Ltd for Rs164 crore in cash.
“The deal will bring us a retail distribution network that can be scaled up...and a seasoned management team,” Rashesh Shah, chairman and chief executive officer of Edelweiss, said over phone after signing the deal.
Ahmedabad-based Anagram has 137 branches and 180,000 customers. It had a net worth of Rs65 crore and Rs100 in revenue in the nine months to 31 December.
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The acquisition trebles Edelweiss’ network to about 200 offices from 65 now, for the distribution of its insurance and mutual fund products.
Shah said Edelweiss could have built the network in 18-24 months at a lesser cost, but would have lost valuable time.
Established in 1994 by the Lalbhai group, Anagram and its subsidiaries offer a range of broking services to retail clients across equities, equity derivatives and commodities.
Edelweiss plans to operate Anagram as a 100% subsidiary, “building on the current business and people with investments in research, products, training and technology”, Shah said.
Mint had reported earlier in January that Edelweiss was close to signing the deal with Anagram, a firm controlled by Sanjay Lalbhai, chairman and managing director of textile firm Arvind Ltd.
“This transaction is a win-win for Anagram clients and employees,” said Mayank Shah, chief executive officer of Anagram Capital.
Edelweiss had signed a joint venture agreement in November with Japanese insurer Tokio Marine Holdings Inc. to enter the Indian life insurance space. It also runs an asset management company and has businesses in institutional equities, equity financing and investment banking. It has for long wanted to build a retail broking network.
Shah said there could be more consolidation among brokerages and 50-60% of the existing businesses would be controlled by 15-20 firms. In 2008, Birla Global Finance Co. Ltd had picked up a 56% stake in Apollo Sindhoori Securities Ltd, valuing the firm at around Rs350 crore.
Shares of Edelweiss fell 2.63% on Wednesday to close at Rs438 on the Bombay Stock Exchange, in line with the benchmark Sensex index, which ended with losses of around 3% at 16,289.82 points.