Financial terms of the deal were not disclosed. Indian media has speculated that the US investment bank will pay Rs2 billion ($49.5 million) for Brics.
Via the deal, Lehman Brothers will gain a ready-made equity research, sales and trading platform in India with 40 professionals. This will enable it to offer clients comprehensive equity research, primary equity placement, secondary trading and investment services in India. Brics currently has active coverage of 70 companies.
Brics' institutional equity group services foreign and domestic financial institutions, mutual funds, and banks. Pankaj Vaish, LehmanÆs head of equities in India, will take charge of the business.
Brics Securities was created in October 2003 following the dissolution of Birla Sun Life Securities, a joint venture between the Aditya Birla Group and the Sunlife Group of Canada.
In a written statement, Tarun Jotwani, chairman and chief executive officer of Lehman Brothers India, says: "This transaction underscores our commitment to building a strong franchise. Brics' institutional equity group is a natural fit in our efforts to accelerate our development and broaden our suite of client services.ö
Brokerage firms in India have been in the limelight this year as a number of transactions have closed or are in the offing, some due to re-alignments of global relationships. In February, as part of the dissolution of its India joint venture, Morgan Stanley paid $425 million to take full control of the brokerage side of the JM Financial business. Shortly thereafter, BNP Paribas bought a 34.4% stake in Geojit Securities. In July, JM Financial announced it would buy 60% ownership in domestic firm ASK Securities for $14.4 million to kick-start the business Morgan Stanley acquired. ASK group had dissolved its own joint venture with Raymond James earlier this year.
Standard Chartered Bank confirmed in May that it is in discussions to acquire UTI Securities, although no deal has been announced yet. And discussions between Nomura, Japan and Enam Financial Consultants with regard to Enam's broking business are said to be at an advanced stage. Meanwhile, local firms like ICICI Securities and India InfoLine are also beefing up their capabilities in this area.
All this activity has created stiff demand for talent. And the winners, at least in the short term, could be the investment bankers with relevant experience, who are currently worth their weight in gold.
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