Birla group to buy Apollo's broking arm

The Aditya Birla group is close to buying the Reddy family's 66.32 per cent  stake in Apollo Sindhoori Capital Investments (ASCIL), marking a re-entry of the group into the broking business.

The deal will value the broking firm at Rs 390 crore (Rs 3.9 billion), a source familiar with the developments said.

The Aditya Birla group, which has interests in telecom, cement and fertilisers, has pipped US-based JP Morgan and Anil Ambani-promoted Reliance Capital to emerge the frontrunner for the Chennai-based firm.

The Reddy family, promoters of Apollo Hospitals, is exiting ASCIL as a part of its strategy to divest its interests in non-core businesses.

The Aditya Birla group will make an open offer for the broking firm after buying out the Reddys' stake according to the Sebi takeover guidelines.

The ASCIL stock closed 0.7 per cent lower at Rs 470 on BSE on Tuesday. "The deal is in the final stages and will be sealed soon," said the source. Suneeta Reddy, executive director (finance), Apollo Hospitals, had said that the group was willing to sell the stock broking outfit as it intended to focus on its core business - healthcare. 

Ajay Srinivasan, CEO, Aditya Birla Group's financial services division, had also said, "We are looking at re-entering the  broking business by targeting certain kinds of customers. We would look at the mass affluent customer group, typically the Indian middle class, the high networth individual group and the institutional segment, of which SMEs are a fast-growing component. We want to provide broad-based offerings to these target groups. Investing directly in equities is what these target groups would be looking to do and is something that we are evaluating."

In 2003, the Birlas had exited the stockbroking business by selling Birla Sun Life Securities, a JV between the Aditya Birla group and the Sun Life Group of Canada to the JV Gokal Group. Formed in 1995, Apollo Sindhoori has over 700 offices across the country with a clientele of over 1,40,000 customers, which would be a headstart for the Birla group in the country's booming broking business.

DEAL STREET

The Chennai-based broking firm has been valued at Rs 390 crore

The Aditya Birla group has pipped US-based JP Morgan and Anil Ambani-promoted Reliance Capital to emerge the frontrunner for the Chennai-based firm

The Reddy family, promoters of Apollo Hospitals, is exiting ASCIL as a part of its strategy to divest its interests in non-core businesses