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Our Bureau

Mumbai, Aug. 28 The Aditya Birla Group on Thursday announced its re-entry into the stock broking business by picking up a 56-per cent stake in the Chennai-based Apollo Sindhoori Capital Investments Ltd (ASCIL).

Aditya Birla Nuvo has bought 3.10 crore shares of the retail broking firm for Rs 198.8 crore, a press release from the Group said..

The AB Nuvo has paid Rs 64 a share for the acquisition, a premium of 21 per cent over ASCIL’s Wednesday’s closing price on the BSE; it would further make an open offer for a 20 per cent stake in Apollo Sindhoori upon receiving the necessary approvals, said the release.

“The strategic intent of this agreement is to position the Aditya Birla Financial Services group as a broad-based and integrated player in the financial services business,” the Aditya Birla Group Chief Executive, Financial Services, Mr Ajay Srinivasan said.

The Group had earlier sold their stock broking arm, Birla Sun Life Securities, which was a joint venture between the AV Birla Group and Canada’s Sun Life Group. This company was later renamed BRIC Securities and was sold to Lehman Brothers in 2007.

ASCIL has a network of 760 branches, of which, it owns 190. The Aditya Birla Financial Services group has set a target of Rs 1,000 crore for the current fiscal, to extend the distribution network and product portfolio of its insurance business. The group already has presence across financial services including life insurance, fund management, distribution and wealth management, security-based lending, insurance broking and private equity.

Broking firms are facing difficult times because of the current stock market conditions. However, analysts say there would be little negative impact on the AV Birla Group on account of this acquisition.

“The retail broking business will be just a small part of their business,” said the head of research at a Mumbai-based stock broking firm.

“They are basically entering into this business to complete the bouquet of financial services they already provide.”

The share price of Aditya Birla Nuvo ended the day down 0.65 per cent at Rs 1,300.50, while ASCIL shares were up 9.55 per cent at Rs 57.9 on the BSE today.

More Stories on : Financial Services | Mergers & Acquisitions

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