Edelweiss buys Anagram to strengthen its retail broking business

Domestic Indian investment bank Edelweiss Capital has struck an agreement to buy Anagram Capital for Rs1.6 billion ($35 million) to strengthen its retail broking business.

Through a network of more than 137 branches and over 1,300 sub-brokers, Ahmedabad-based Anagram services more than 180,000 clients. The company, which is part of the Lalbhai Group, earned revenues of Rs1 billion for the nine-month period ending December 31.

Edelweiss was established in 1996 by Rashesh Shah. It has grown from offering primarily investment banking services into a diversified financial services company with a presence in brokerage, asset management and financing, as well as investment banking.

Edelweiss went public in 2007. Its $176 million initial public offering was 176 times covered. It is currently active primarily in the institutional broking segment. Thus, the Anagram business will allow it to diversify into retail broking. 

"We evaluated the option of building out the retail brokerage business, which might have been marginally cheaper but would have been much more time-consuming," said Shah in an exclusive interview with FinanceAsia. "Further, with the deal we are acquiring Anagram's experienced management team, which will be an asset to our plans."

The deal was done on a principal-to-principal basis without advisers. The Lalbhai Group had been examining strategic options for Anagram and Edelweiss made an offer to acquire the business. The valuation was negotiated based on various financial parameters, including multiples at which comparable deals have been transacted, and revenue and profit multiples. It also took into account Anagram's customer base and network.