IL&FS Investsmart to float brokerage arm

IL&FS Investsmart, which reported a 64 per cent rise in its revenues today, received approval from its board to transfer its broking and related business to a wholly owned subsidiary to focus more on financing.

The subsidiary, to be floated after two months, will absorb the merchant banking, portfolio management and financial instrument distribution businesses of the company.

"Competition is such that we need to focus more on providing robust financial services to our customers," said Hemang Raja, MD and CEO of the company.

IL&FS Investsmart, which had spun off from the parent IL&FS a year ago, now has major plans for which it prefers to rely on its own resources rather than that of the parent company, Raja added.

"Before we became independent, IL&FS was there to carry out that part of the business, but being alone and with the kind of competition in the market, it has become imperative for us to enter both financing as well as broking," Raja said.

Investsmart posted a 116 per cent rise in its profit to Rs 19.31 crore for the December 2005 quarter, and increased its revenue to Rs 48 crore (from Rs 29 crore).

Investsmart has decided to invest in a big way in the two subsidiaries it had spun off for insurance and commodity broking businesses in the middle of last year, as well as in the new arm.

The company has a corpus of around Rs 450 crore raised through GDRs, Raja informed, adding the board today "authorised us to prepare a detailed plan on how much to invest in the existing subsidiaries, in the new one and the main one".

We will call for a shareholders' meeting in a month or two for their final approval".

Investsmart recently hauled up its technology and distribution infrastructure and extended its presence outside India with the Rs 140 crore raised through last year's IPO.