Mumbai-based Networth Stock Broking Limited, a decade old financial services provider, is all set to merge with Ahmedabad headquartered Monarch Group of Companies.
Under the proposed scheme of merger, Monarch will become a majority shareholding promoter in BSE-listed Networth Stock.
The board of directors of Networth has approved the scheme of merger at the company’s board meeting held on Saturday.
Networth would now file a petition in the Bombay High Court to get an approval for the proposed merger with Monarch, informed a source close to the development.
“The transaction will be conducted at a swap ratio in the range of 1.95 to 2 shares of Networth to one share of Monarch,” informed a source close to development. Networth shares ended at Rs 52.25 per share on the BSE on Friday.
The promoters’ shareholding in the company stood at 31.80 per cent as on December 2010, which will rise to 75 per cent after the proposed merger.
Moheet Agrawal, independent director, Networth Stock Broking said, “Post merger, the dominant promoters’ stake in the company will be 75 per cent, while public holding will reduce to 25 per cent.
Monarch’s share in the promoters’ group will be around 65 per cent, while remaining 10 per cent will be held by the present Networth promoters.”
Post-merger the equity capital of Networth will rise from the current Rs 11 crore to around Rs 33 crore. This would reduce to the public shareholding in the company from the current 68.2 per cent to 25 per cent.
With the said strategic alliance between Monarch and Networth, the joint company would benefit in terms of cost efficiency.
The operations would expand on a larger scale with increased output services and reduced cost of operations, which would result in better profitability of the group.
The proposed merger will enhance wealth management division with portfolio management services of Monarch. The company may start merchant banking division as well.
The group will have tie up with Punjab National Bank for Online trading platform across India. Besides research and analysis expertise the group will also get a strong support in the technical and IT applications.
The client-base of the company will also rise after the merger, with expanded reach in pan-India market.
While Monarch has strong presence in the western and northern part of the country with over 80,000 clients, Networth has strong foothold in the southern market having over 90,000 clients.
The proposed merger will put the group in the distinct club of top 20 companies having largest number of registered clients in India.
