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DEEPAL GANDHI & SHRAY KAMBOJ CORPORATE TEAM 30.09.2011.

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Presentation on theme: "DEEPAL GANDHI & SHRAY KAMBOJ CORPORATE TEAM 30.09.2011."— Presentation transcript:

1 DEEPAL GANDHI & SHRAY KAMBOJ CORPORATE TEAM

2 ICICI BANK JOINED AXIS BANK K V Kamath, MD & CEO of ICICI Bank Shikha Sharma Chanda Kocchar KV Kamath, Former MD & CEO of ICICI Bank retired on 30 th April 2009.Chanda Kocchar & Shikha Sharma were the top contenders for the post. Shikha Sharma lost to Chanda Kocchar and resigned to join as CEO of Axis Bank.

3 Drive to make Axis bigger than ICICI Brain Wave Vallabh Bhansali Shikha Sharma Anil Singhvi, Former Gujarat Ambuja CEO

4 Nimesh Shah Jagdish Master Namura Securities Co, Japan Enam was scouting for funds with Namura, Japan but the deal could not happen due to over valuation. Enam was founded in 1984 by Manek Bhansali, Nimesh Shah, Vallabh Bhanshali and Jagdish Master, who were referred to as the Formidable Four of Dalal Street. Vallabh Bhansali

5 AXIS BANK ENAM SECURITITIES - Larger market capital - Entry into equity capital market - Commonality with client profile - One stop financial shop

6 AXIS BANK ENAM GROUP AXIS SECURITIES AND SALES (ASSL) ENAM SECURITIES Valued at 2067 Cr ENAM SECURITIES Valued at 2067 Cr wholly owned subsidiary demerge IB & security business consideration 3.3% Equity consideration 3.3% Equity acquire Deal announced- 17 th Nov 2010

7 Cashless transaction No capital gain tax Vallabh Bhansali to be on the board as an independent director; Bank shares were used as currency for payment of certain business; This deal will set a precedent for other deals in future– Insurance company or their division can be merged with banks.

8 Did not favour Vallabh Bhansali to come on Board of Bank; Business was acquired not by Axis bank but by wholly owned subsidiary; The intangible worth (goodwill) is huge i.e – 274 Cr. RBI was not sure of treatment of goodwill in Axis bank books; RBI was worried of other banks following the similar transaction.

9 Announced on 16 th september, 2011 ENAM GROUP ENAM SECURTIES DEMERGER AXIS BANK Enam gets 13.7 million shares of Axis Bank equivalent to 3.35% equity 1 share of Enam to get 5.7 share of Axis Bank Consideration 3.3% Equity

10 AXIS BANK SELL ENAM SECURITIES ASSL (wholly owned subsidiary of axis bank) Pay 274 cr cash equivalent to bookvalue of Enam business

11 Shareholder approval granted on 16 th September, 2011; Necessary approvals including that of the creditors of both the parties, apart from the High courts of Mumbai and Gujarat are to be taken ; Approval by capital market regulator Securities and Exchange Board of India (SEBI) and periodic disclosure under SEBI (Issue of Capital and Disclosure Requirements ) Regulations 2009 is required; The deal will take another approximately six months to complete; Axis Bank could not convince RBI to allow Enam Securities Chairman, Vallabh Bhansali to become a director on its board.

12 First time a commercial bank with (government DNA) has acquired an non- banking business by using shares as currency for such acquisition. RBI is concerned of change in bank ownership due to such acquisition through share swap. IRDA has announced regulation to govern M&A in government insurance space in the form of IRDA (Scheme for Amalgamation and transfer of General Insurance business) Regulation 2011, similar regulation needs to be issued by Banking Regulator - RBI to govern banking specific M&As. RBI has prepared draft guidelines to issue banking licenses to private entities. This move has facilitated ambitions of several industry giants showing interest to share a slice of the Rs. 64 trillion industry which is set to 20 % in the year *. Along with new entrants will come a flood of similar M&As. We may capitalize on this growth and set up a division constantly updating domain knowledge in the said sphere. *FIDCI - Annual Survey Feb 2010, "Indian Banking Sector: The current state and road ahead"

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