Ranbaxy's Religare becomes first Indian brokerage to acquire London firm
26 March 2008
Mumbai: In what could become the first overseas acquisition by an Indian brokerage firm, Religare, the financial services arm of the Ranbaxy group, is acquiring London's oldest broking firm Hichens, Harrison & Co. in a deal estimated around $110 million.
For the half-year ended June 2007, Hichens, Harrison & Co, listed on the Alternative Investment Market of the London Stock Exchange, had reported revenues of £10.6 million and operating profits of £2.9 million. The company has a share volume of 19.3 million, which at Religare's offer of 285 pence for each, translates to a market capitalization of £255 million, almost equivalent to $110 million. As per current exchange rates, this equals around Rs440 crore.
Sunil Godhwani, CEO and managing director of Religare, while confirming Religare's offer of 285 pence per share of the British broking firm, spoke about its 200-year pedigree and how the acquisition will give them an opportunity to distribute what ''they originate in India''. Praising the business model of Hichens, Harrison & Co., he said that this foreign presence ''will really place Religare…. in a global arena today to make us think globally rather than just being India centric''. According to him, the purchase will be funded through a mix of cash, equity and debt.
Religare, which listed on the Indian markets late last year, has embarked on a major expansion spree in India to tap onto the latent boom in investing in stock markets. This acquisition would catapult Religare from being just a national brokerage to an international one, resulting not only in giving the firm access to foreign institutional investors but also add value to its existing clients.
Hichens, Harrison & Co. has a presence in nearly a dozen countries like the US, the UK, South Africa, Indonesia, Malaysia, Argentina, Dubai, Luxembourg, and Singapore, as well as an enviable track record of dealing for institutional clients and investment advisory services to high net worth clients, having already raised capital in excess of £400 million this year.
Buoyed by this news, shares of Religare ended considerably higher on Indian markets on a day the benchmark indices fell. While the stock appreciated 4.13 per cent on the Bombay Stock Exchange to end on Rs380.35, the price at the end of the day on the National Stock Exchange was Rs379.50, a gain of 3.77 per cent over yesterday.