IDBI Capital Markets Ltd, a subsidiary of IDBI Bank, is reworking its businesses to focus on mid-sized companies. The company is also ramping up its retail broking operations to exploit the network of IDBI Bank branches.
IDBI Capital Managing Director and Chief Executive Officer Abhay Bongirwar said while IDBI Bank focuses on large companies and retail, IDBI Capital would focus on mid-size companies, a segment which has shown considerable growth.
“The aim is to build a relationship with mid-sized companies with a three-five year perspective to get mandates for debt and loan syndication, restructuring, mergers and acquisitions, private equity and business advisory”. Companies with a turnover of Rs 10 crore - Rs 500 crore considered mid-sized companies.
IDBI Capital Markets, set up in 1993 to manage broking, merchant banking and distribution business, has been laggard for over 18 months, compared to competitors like SBI Capital markets and other merchant banking players. In April 2008, IDBI roped in Nagendra Bhatnagar, a senior SBI Capital Market official, to run the subsidiary. Bhatnagar quit the company in 2010. IDBI Bank then appointed its chief general manager, Abhay Bongirwar, as the managing director and chief executive officer of IDBI Capital in December, 2010.
IDBI now plans to increase the synergy between the different subsidiaries. The company posted a net profit Rs 4.42 crore and revenues of Rs 57 crore in 2010-11. In 2011-12, IDBI Capital plans to substantially improve its earnings from the institutional and retail broking businesses and increase its profit to Rs 37 crore and its revenue to Rs 125 crore, Bongirwar said. The company’s net profit had doubled to Rs 22.30 crore in 2009-10 from Rs 11.16 crore in 2008-09, while total income had shown a marginal growth at Rs 52.7 crore in 2009-10 from Rs 49.95 crore.
The company plans to increase the headcount in departments dedicated to mergers and acquisitions, restructuring, project appraisal and legal businesses to scale up business. However, it may trim the branch base and the number of its employees in the retail business.
The company’s retail broking business, including its online broking platform, Idbipaisabuilder.in, has a client base of 75,000. This business has remained stagnant and has a market share that lags behind that of other portals like ICICI Securities’ ICICI Direct. “The activity has been low key. We may scale down the number of branches from the current 50 and shift some staff to central locations to improve customer relations and efficiency. We also intend to use IDBI Bank branches and its field staff to tap bank customers,” Bongirwar said. The current staff strength of the retail broking business is 175.
