Religare to acquire UK broking co for $100 million

Domestic brokerage firm Religare Enterprises is close to acquiring London’s oldest broking firm; Hichens, Harrison & Co. The deal is expected to be announced by this weekend. The size of the acquisition is pegged over $100 million (about Rs 400 crore).

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. If successful, this
would be first overseas acquisition by an Indian brokerage firm abroad.

When ET contacted, Religare CEO and MD Sunil Godhwani said, “We are constantly evaluating opportunities to strengthen our business model both through organic and inorganic routes, especially for our institutional business.” The proposed acquisition is expected to give Religare a foothold in the extremely competitive international capital markets. The company, which currently has one of the largest retail networks among Indian brokerage firms, is now eyeing a strong presence in the institutional space.

Hichens, Harrison, which has been in business for over 200 years, offers services like corporate broking, institutional broking and sales, private client broking contracts for difference apart from its proprietary book trades. It acts as corporate broker for small and medium sized listed companies and advises them on raising capital though new issues,
secondary fund raising and private placements.

Further, it has a long track record of dealing for institutional clients and investment advisory services to high net worth clients. The AIM listed firm has its presence in nearly a dozen countries the US, the UK, South Africa, Indonesia, Malaysia, Argentina, Dubai, Luxembourg, and Singapore being the major ones. Sources said that the acquisition would provide Religare access to international markets and the brokerage would be in a better position to help its local clients access international markets. Religare shares closed at Rs 365, up 5% over the previous close on BSE.

Also, the acquisition would immediately add to the top-line and bottomline of the firm. Also, the UK-based brokerage has a large client base of high net worth individuals, who are expected to become institutional investors in India.
Religare has also made forays in insurance and wealth management through JVs with Aegon and Macquarie, respectively. The Religare Macquarie wealth management JV is the first such venture in India.