Company all set to acquire three securities firms by early next year.
Brics Securities, which sold its institutional equity business to Lehman Brothers last year, is close to acquiring three securities firms and resume its foray into retail and institutional broking by early next year. A no-compete agreement with Lehman expires in another couple of months.
A senior executive close to the development told Business Standard that Brics is in the final stages of negotiations with Kerala-based listed firm Vertex Securities, and will acquire two more firms based in Delhi and Indore. He, however, did not want to name these two companies.
With the completion of these acquisitions, Brics will get access to around 150,000 retail customers, the executive said.
Brics will initially invest at least Rs 50 crore to set up its broking business. The company plans to buy the promoters' stakes in these securities firms and then take over their entire operations. While the entry into the retail brokerage space will be through acquisitions, Brics will hire a new team for its institutional equity business.
Brics has about 200 employees at present, with 10 research analysts working in the private clients group.
| ON TRACK | |
| * With the completion of these acquisitions, Brics will get access to around 150,000 retail customers | |
| * Brics will initially invest at least Rs 50 crore to set up its broking business | |
| * The company plans to buy the promoters' stakes in these securities firms and then take over their entire operations | |
| * Brics has about 200 employees at present |
After the acquisitions, the equity broking business will take at least two years to break even. We expect revenues of Rs 150 crore each from retail and institutional broking by 2010-11, a senior Brics executive said.
Brics is setting up its broking business at a time when the equity markets are going through a lull and the profits of domestic securities firms have taken a knock of 40-50 per cent. "Our fees and commission incomes are about 50 per cent lower this year, as compared to last year. This is mainly due to the absence of confidence among retail investors. We expect the conditions to prevail for another six to nine months," said the head of research at a leading securities firm.
Brics is currently running only the private clients group business. The Brics executive said it is better to acquire new companies now instead of setting up a new team and scout for clients. Shares of many financial services companies are trading at attractive levels at present.
After the acquisition, the company intends to shift retail clients to the online trading platform to keep costs low.
