Religare to buy UK's oldest broking firm Hichens Harrison

The oldest stockbroker in London is set to become the latest British institution to be acquired by an Indian company.

Ranbaxy-promoted brokerage firm Religare Capital Markets has made an open offer to Hichens Harrison. It will pay Rs 226.05 (285 pence) per share, valuing the UK broking firm at Rs 440 crore (£55.5 million).

This is assuming the exercise of all outstanding Hichens options, representing a multiple of 13.1 times Hichens basic earnings per share for the 12 months ended December 31, 2007.

The boards of Religare and Hichens have agreed on the terms of the cash offer for the whole of the issue and to-be-issued share capital of the UK firm.

Following the approval of Reserve Bank of India, Religare will make the offer through a newly incorporated wholly-owned subsidiary in Mauritius. Already a no-objection certificate has been obtained for the same.

Commenting on the acquisition, Religare Enterprises group CEO and MD Sunil Godhwani said, “We are very excited that Hichens has accepted our cash offer. We are looking forward to binding our strengths and exploring opportunities.”

The acquisition of Hichens Harrison is expected to help Religare boost its investment banking operations and extend its geographical reach in emerging markets.

Hichens CEO Adam Wilson said the Religare-Hichens combination’s prime intention would be to focus on traditional merchant banking with special emphasis on emerging companies. Religare is listed on the Bombay Stock Exchange and has a market capitalisation of about Rs 2,775 crore.

Religare Enterprises is also looking at foraying into general insurance business. “The Board has already given in-principle approval for it and we are looking for both domestic and foreign partners for the venture,” Religare Enterprises’ Group chief financial officer Anil Saxena told reporters.

The company’s life insurance subsidiary, Aegon Religare Life Insurance Company, has got initial approval, R1 licence, from the regulator earlier this month. The company expects the life insurance venture to be operational by July.

“We have plans to start with a large footprint going well beyond the tier-I cities across the country,” Mr Saxena said, adding that the company would start its operation with 50-60 branches. Religare Enterprises has partnered the Netherlands-based Aegon and Bennett Coleman Company (BCCL) for the life insurance venture.

While Religare Enterprises, as a lead partner, would have a 44% stake in the venture, BCCL would have 30% stake while the remaining would be with Aegon.