The boards of 5paisa Capital Ltd and IIFL Securities Ltd today approved the transfer of IIFL Securities' Online Retail Trading Business to 5paisa Capital, subject to statutory and regulatory approvals. The reorganization between the two IIFL Group entities aims to consolidate the Online Retail Trading businesses under one single entity.
IIFL Securities, one of the leading capital market players in the financial services space with assets under management and custody of ₹1.18 trillion, today, operates in four distinct Strategic Business Units (SBUs) catering to the following business segments -
a) Online Retail Trading (OLRT)
b) Private Client Group (earlier known as Premia)
c) Institutional Equities and Investment Banking
d) Franchisee (B2B)
5paisa Capital is a leading discount broker with more than 3.2 million customers and average daily turnover of ₹1.8 trillion (November 2022) with end‐to‐end digital offering for retail customers and/or primarily millenials. IIFL Securities has been servicing Online Retail Trading Customers same as 5paisa Capital creating overlap in the target segment.
The merger of IIFL Securities' Online Retail Trading Business with 5paisa Capital will
a) Mitigate the overlap, improve efficiencies and sharpen focus
b) Facilitate focussed management teams with conducive culture for respective businesses
c) Help the two companies achieve scale and strive for leadership in their focus growth areas
d) More efficient utilization of capital for growth of the consolidated business in separate entities
e) Investors can have superior visibility on performance, prospects and strategy for their investment.
Consequent to the transaction, approx 1.5 million customers of IIFL Securities undertaking Online Trading Business will be hived‐off to 5paisa Capital. 5paisa Capital's customer base is likely to increase by over 40% to over 4.7 million customers. Also, 5paisa Capital will have strategic advantagesin terms of increased customer base, revenues, including cross sell and profitability.
At the same time, IIFL Securities will sharpen its focus on Private Client Group (PCG), primarily targeting clients with financial assets above ₹10 million. IIFL Securities also plans to expand and digitally empower its base of franchisee / sub‐brokers to target and service clients with ₹1 ‐ ₹10 million worth of financial assets and looking for personalized services. Clients with less than ₹1 million of financial assets are best served by digital and online offerings of 5paisa Capital.
In lieu of this transfer, IIFL Securities shareholders will receive 1 share of ₹10 paid up of 5paisa Capital for every 50 shares of ₹2 paid up of IIFL Securities held by them as on the record date.
Commenting on the reorganization, Mr R Venkataraman, Chairman and Managing Director of IIFL Securities said, "With this reorganization, the group serves all segments of customers for their varied and specific requirements, with distinct brand and corporate entities. We expect significant cost savings by removing the overlap in the group businesses as well."
Mr Prakarsh Gagdani, CEO, 5paisa Capital said, "We are excited to acquire Online Retail Trading Business of IIFL Securities. With an increased customer base, we will be able to significantly boost revenue potential with less incremental cost. We are committed to offer the best digital experience to our customers with focus on profitable growth through customer centricity."
Khaitan & Co. and V. Sankar Aiyar & Co. were legal advisors and auditors respectively for both the companies. GT Valuation Advisors Private Limited and Bansi S. Mehta Valuers LLP served as valuers for IIFL Securities and 5paisa Capital respectively. ICICI Securities Limited and Keynote Financial Services Limited, merchant bankers, gave their fairness opinion for IIFL Securities and 5paisa Capital respectively.
Shares of 5Paisa Capital Limited was last trading in BSE at Rs. 327.35 as compared to the previous close of Rs. 323.90. The total number of shares traded during the day was 4555 in over 484 trades.
The stock hit an intraday high of Rs. 329.25 and intraday low of 319.85. The net turnover during the day was Rs. 1482963.00.