BackAxis Bank cuts Enam deal value by one-third
Axis Bank cuts Enam deal value by one-third
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Mumbai: Axis Bank Ltd has revised the terms of the November 2010 deal to buy Enam Securities Pvt. Ltd, cutting the deal size by almost one-third to reflect changed market conditions.
In another development, Axis Bank said it had reached an agreement to sell a 25% stake in its mutual fund subsidiary, Axis Asset Management Co. Ltd (Axis AMC), to Schroder Singapore Holdings Pvt. Ltd.
“The board of Axis Bank has today approved the reassessment of valuation of financial services business proposed to be acquired from Enam Securities considering the prevailing market conditions and having regard to underlying commercial factors," Axis Bank said in a statement.
“Pursuant to the revised scheme and in consideration for the proposed demerger, Enam shareholders would receive Axis Bank shares in the ratio of 1 share for every 5 shares held in Enam, translating into approximately 2.93% shareholding in Axis Bank," the bank said.
The deal originally envisaged Enam shareholders being offered one share in Axis Bank for every 5.7 shares of Enam, translating into a 3.35% stake in the bank.
There will be no board seat for any Enam member, Axis Bank said. Enam co-founder and chairman Vallabh Bhansali had been earlier picked to join the board of the bank, which the banking regulator had objected to.
Axis Bank said Enam would nominate two directors to the board of Axis Securities Ltd, the broking arm of the bank.
Axis Bank didn’t disclose the value of the stake sale in its mutual fund business to Schroder Singapore Holdings, a subsidiary of Schroders Plc, the UK’s largest asset management company, with £187.3 billion ( ₹ 16 trillion) under management as on 31 December.
The transaction, subject to regulatory approval, is expected to be complete this year.
“The transaction provides Axis AMC access to Schroders’ global distribution network and to advise overseas funds invested in Indian securities," Axis Bank said.
The bank posted a 25% rise in its net profit to ₹ 1,277.27 crore in the January-March quarter, driven by demand for loans as well as fee income.
Demand for loans grew 19%, helping the bank earn ₹ 2,146 crore in net interest income, up from ₹ 1,701 crore in the same period last year. Its other income rose to ₹ 1,587.62 crore from ₹ 1,450.40 crore, backed by fees and commissions earned from companies as well as individuals.
“Fee income from retail banking grew 21%, while for business banking grew by 20%," Axis Bank said.
Its net interest margin (NIM), at 3.55%, was better than the 3.44% recorded in the same period last year. NIM is the difference between interest charged on loans and that paid for deposits and is considered a key measure of a bank’s profitability.
Earnings per share improved to ₹ 30.75 from ₹ 24.54.
Axis Bank shares rose 1.57% to close at Rs.1103.25 apiece on BSE on Friday, even as the benchmark 30-share Sensex gained 0.02% to close at 17134.25 points, and the banking index, Bankex, rose 0.16% to end at 11684.72 points. The bank announced its results after market hours.
Although its earnings beat the analysts estimates, the bank’s retail banking division posted a loss of ₹ 5.83 crore during the period. In the corresponding quarter last year the retail business had posted a profit of ₹ 113.52 crore.
Net non-performing assets (NPAs) as a percentage of net advances declined slightly to 0.25% from 0.26% last year although on an absolute basis net NPA increased to ₹ 472.64 crore from ₹ 410.35 crore last year.
Axis Bank restructured loans worth ₹ 588 crore during the period, taking the total restructured loans till March to ₹ 3,060 crore.
Joel.r@livemint.com
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