HSBC completes 93.86 pc acquisition of IL

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Mumbai, Sep 30 (UNI) HSBC today announced its acquisition of 93.86 per cent of IL&FS Investsmart Limited (Investsmart), a leading retail brokerage in India, for a total consideration of Rs 1,311 crore (approx. USD 296.4 m).

Commenting on the acquiisition, Sandy Flockhart, Group Managing Director and Chief Executive Officer of HSBC Asia-Pacific, said the investment gave HSBC access to the world's third-largest investor base, with over 20 million retail investors. ''In fact, the business already has 1,43,000 customers and operates in 128 cities. With Indian GDP expected to grow by 7.8 per cent in 2009, the opportunity here is obvious and underlines why HSBC has a stated strategic aim of focusing on high-growth economies,'' he added.

Under the transaction agreement, HSBC acquired 43.85 per cent of Investsmart from E*TRADE Mauritius Limited, an indirectly wholly-owned subsidiary of E*TRADE Financial Corporation, and 29.36 per cent from Infrastructure Leasing and Financial Services Limited (IL&FS). The decision to acquire a controlling stake in Investsmart, triggered an open offer to public shareholders, through which HSBC has accepted shares equivalent to 20.65 per cent of Investsmart's capital.

E*TRADE Mauritius Limited, IL&FS and those that tendered shares through the open offer, received Rs 200 per share for their Investsmart shares. In addition, IL&FS was paid, as part of a three-year non-compete agreement, Rs 82 crore (approx USD 17.9 million). In accordance with local regulations, HSBC paid interest of Rs 2.3 per share to the public shareholders who tendered their shares. This amounted to Rs 3.31 crore.

HSBC India Group General Manager and Chief Executive Officer Naina Lal Kidwai said Investsmart is a great addition to our current operations, which already constitute the second largest foreign banking network in India.


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