Axis Bank board approves merger of Enam securities

The board of directors of Axis Bank has approved the transfer of the investment banking and equities business of Enam Securities Private Limited to itself, ahead of a planned sale to the bank's wholly owned unit Axis Securities and Sales Ltd (ASSL) for Rs274 crore ($57.6 million).

Axis Bank, India's third largest lender, had, last year, announced plans to buy the two units for $456 million in an all-stock transaction, but regulatory hurdles prevented the acquisition to take effect.

The structure, announced today, involves a cash payout to Axis Bank from its own unit for transferring Enam's businesses.

Under the scheme of arrangement and as a consideration for the demerger, Enam shareholders will be issued 1,37,82,600 equity shares on the basis of the agreed swap ratio of 5.7 equity shares of Axis Bank for every one equity share of Enam.

Upon completion of this, the bank will sell the Enam financial services business to Axis Securities and Sales Ltd (ASSL), its wholly owned subsidiary, under the scheme of arrangement, and ASSL will pay the bank a cash consideration of approximately Rs274 crore, which represents the book value of Enam.

"It's an accounting treatment mainly to comply with the regulations," sources at Enam Securities said. "There is no structural changes to the deal, which we had announced earlier," he added.

The scheme, however, is subject to receipt of necessary approvals under applicable law, including the approval of the shareholders and creditors to the bank, Enam and ASSL, the relevant high courts and the relevant regulators.