India's Religare to Buy Hichens Harrison
India-based Religare Enterprises has made an offer to acquire UK stockbroking firm Hichens, Harrison & Co for $99 million.
Religare has confirmed to the stock exchange that it is in discussions with Hichens Harrison but has not disclosed the price at which an offer will be made. However, in a filing with the Alternative Investment Market in London where Hichens is listed, the firm confirmed that discussions with Religare are at a proposed offer price of £2.85 ($5.70) per share. Hichens has 17,383,273 issued shares so the offer price translates to an equity value of £49.5 million ($99 million).
Hichens Harrison is the oldest firm of stockbrokers in the City, in business since the early nineteenth century. It is headquartered in London and also has regional offices in Latin America, South Africa, Indonesia and the Middle East. It offers portfolio management services, dealing, derivative sales, institutional sales and research, and corporate broking.
For the six months ending June 30, 2007, Hichens had earnings before tax of £2.85 million up from £2.65 million for calendar 2006. On an annualised basis, Religare is paying around 8.7 times prospective 2008 Ebitda and 18.7 times trailing 2007 Ebitda.
Religare was founded by Malvinder Singh and Shivender Singh, the controlling shareholders in Indian pharmaceutical company Ranbaxy Laboratories. Ranbaxy was founded in 1961 and is one of India's leading pharmaceutical companies. For calendar 2007 Ranbaxy had sales of $1.6 billion on which it earned a net profit of $191 million. Malvinder Singh is CEO and managing director of Ranbaxy.
Religare IPOed in October 2007 pricing its shares at the upper end of the Rs160-Rs185 ($4.00-$4.63) indicative price range. Its filing with the National Stock Exchange (NSE) states that as of December 31, 2007 the founders directly and indirectly now hold 54% of Religare's outstanding shares.
Religare has a presence in the retail and institutional segments as well as a wealth management business. Through a network of subsidiary and associate companies, Religare operates in equities, commodities, insurance, mutual funds, wealth advisory, portfolio management services, personal finance services, investment banking and institutional broking services. Religare recently tied up with Macquarie Bank for wealth management and also has a partnership with Dutch financial group Aegon for asset management.
Religare's retail network spans more than 1,300 locations across 400 Indian cities and towns. Religare also has a representative office in London and has stated plans to open offices in the Middle East and Europe. If it is successful in the takeover, these plans may get a kick-start as Hichens has an established presence in some of these locations.
Hichens Harrison is represented by Ruegg & Co.
Hichens gained about 1% to £2.69 in early trading yesterday. It has traded down from a high of £3.99 in June 2007. Religare lost about 1% on the NSE to close at Rs376.