Edelweiss Wealth Management will be acquiring the securities business of Religare. The acquisition includes securities and commodities broking, and depository participant services.
As part of the deal, Edelweiss will take on the pan-India distribution of around 1,250 points of presence including over 90 branches, and over 1 million clients and the employees of the business, a release said.
Rashesh Shah, Chairman and CEO, Edelweiss Financial Services and Nitin Jain, CEO, Gobal Asset & Wealth Management, Edelweiss Financial Services in an interview to CNBC-TV18 shared more details regarding the acquisition.
Sharing the rationale for the acquisition, Shah said Religare has a good client base and it was a good strategic fit for Edelweiss' wealth management business.
Wealth management business is a fast growing segment and Edelweiss is a leader in that and so the Religare acquisition will help them triple their client base, said Shah.
“A very strong strategic fit in an area where we are in leadership place and this acquisition will strengthen that,” he said.
Basically, brokerage business is getting converted into wealth management business and to convert that we need product, technology, processes, people etc, said Shah, adding that they already have a backend ready from earlier transfers and so this current acquisition will be just a plug and play for the company.
He said, currently they have a client base that is half of what Religare has, so acquisition will help them triple the client base and the company would be paying almost Rs 100 crore premium for that.
According to him, in 18-24 months they will earn that back.
Currently the entire wealth management business in India is estimated at only USD 250 billion but by 2025, it is expected to grow 4-5 times the current size, growing 20-24 percent CAGR, said Shah.
When asked would rural be a good theme to play, he said yes it would be on back of government’s committed to doubling farm incomes by 2022, the focus on rural investments would go up.
Nitin Jain said they would be taking in 2000 employees of Religare Securities post acquisition.
He said the idea is also to cross sell their products.
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