Axis Bank buys ENAM

Axis Bank chief Shikha Sharma on Wednesday played a masterstroke by clinching a Rs 2,067 crore all-stock deal to take over the highly lucrative investment banking and equity businesses of Enam Securities.



The deal, under which 5.7 shares of the bank will be exchanged for each share of Enam, valued the domestic financial services major at Rs 8,333 per share. Apart from being a precursor to many such deals aimed at creating a financial supermarket model, it also represents the highest such valuation (20 times earnings) for a standalone investment banking firm.

As part of the deal Vallabh Bhanshali, co-founder and chairman of Enam, and a master deal-maker, will join the Axis Bank board. In addition, some other Enam directors will also work with the bank and 400 of its staff will move to a new wholly-owned subsidiary of Axis Bank. The bank has signed a five-year no compete clause with Bhansali and will use the Enam brand name for two years. Bhanshali, however, retains the assets management and portfolio management businesses.

Its a win win for both. While Enams strong mergers & acquisitions team can bring in large deals on the table, Axis Bank, with a strong balance sheet size can back such deals to earn substantial fees. Besides, the bank will use Enams expertise in distributing public offers through its 1,100 branch network.

via Times of India