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Mid-sized Mumbai-based brokerage Antique Stock Broking and two of its subsidiaries are being acquired by Fortune Financial Services for about Rs 30 crore, according to sources.
The latter, in a filing with the BSE, said: “The company/its subsidiary entered into memorandum of understanding for acquisition of 100 per cent stake of Antique Stock Broking Ltd and Agreement for Transfer of investment banking division of Antique Capital Markets Private Ltd with Antique Finance Private Ltd/its subsidiary, subject to applicable regulatory and other approvals and conditions.”
The company was started almost a decade back by Kirti Doshi, Gagan Chaturvedi and Rohit Kothari and has presence in investment banking and research through its two firms Antique Stock Broking and Antique Capital Markets. All three promoters have sold their stakes as part of the deal to make way for a brand new entity.
A person in the know of the development said: “Apart from Antique, Fortune Financial has bought a debt syndicate company and an auto finance company as well, which would be merged with Fortune Financial to form a new company with effect from the new fiscal in April 2014.”
“Fortune Financial plans to become an integrated financial services platform and not remain just in stock broking related business. The existing employees of Antique had been told at the time of announcement of the merger that their jobs would not be impacted as part of the deal,” he added.
Antique Stock Broking which operates in Mumbai’s Nariman Point comprises about 150 employees and has about 300 HNI and institutional clients (both FIIs and DIIs).
While Chaturvedi has already resigned and quit, Doshi would continue to remain a part of the company and Kothari would stay on for a year, according to sources.
Sudhir Valia, Executive Director of Sun Pharma and brother-in-law of founder Dilip Shanghvi, along with his wife Raksha Valia holds 5.4 per cent of the equity capital of the company.
A questionnaire sent to his office on the deal went unanswered and despite several attempts to reach the top management of Fortune Financial, the company did not comment on the deal dynamics.
Fortune Financial was founded in 1991 by Chairman J.T. Poonja, and vice-chairman and managing director Nimish C. Shah. The bloodbath in the stock brokerage industry has entered the next phase of consolidation with small and mid-sized brokerages being acquired by larger players and merged with others. While stressed valuations make such deals attractive for buyers, the sellers benefit from the exit route these transactions provide. This makes it a win-win situation for both.
The Fortune Financial scrip closed at Rs 59.55 on Wednesday, down 5 per cent from its previous close on the BSE.
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