| The New York-headquartered Lehman Brothers has picked up 26 per cent stake in ECL Finance, the non-banking finance company of Edelweiss Capital, for close to Rs 180 crore. |
| The acquisition comes within days after Lehman Brothers bought the institutional broking business of Brics Securities, a Mumbai-based broking house. |
| In March, the Mumbai-based financial services company Edelweiss announced its foray into the non-banking financial space and asset management by investing a total of Rs 400 crore in the new ventures. |
| The NBFC would be looking at mortgage business and other credit instruments. R Balakrishnan, who will head the NBFC business, was appointed executive vice-president of Edelweiss. |
| Lehman Brothers’ acquisition of a substantial stake in the NBFC is the latest in the string of investments by foreign companies in the Indian NBFC sector. |
| Recently BNP Paribas bought 50 per cent stake in an arm of SREI Infrastructure, AIG Capital and bought 75 per cent in Chennai’s Vivek Hire Purchase. Barclays bought Chennai’s Rank Investments. |
| Edelweiss Capital has also raised capital for the group through Heliconia Pte Ltd (which is currently a wholly-owned subsidiary of GIC (Ventures).Greater Pacific Capital, Galleon International, Sequioa,Shuaa Capital and Lehman Brothers (2 per cent). |
| Last week, Edelweiss filed a prospectus with the capital market regulator, the Securities and Exchange Board of India (Sebi), for its initial public offering. The company will be offering 8.3 million equity shares of Rs 5 each and the post issue dilution is 10.92 per cent. |
| A portion of the proceeds of the issue will be used to buy office space of about 30,000 sq ft either for ECL Finance or for Edelweiss Securities. |
| Also the company intends to use the proceeds of this issue towards investments in unlisted subsidiaries. Its investment bank has around 843 employees as on June 30, 2007 and revenues were at Rs 27 crore for the year ended March 31, 2007. |
| The company's consolidated total income was Rs 371 crore and the consolidated profit after taxation was Rs 109 crore. |
| Announcing its acquisition of Brics Securities, Lehman Brothers had said that the transaction would significantly expand its presence in India by accelerating the development of the firm’s equities business and immediately establishing an equity research and sales function. |
Source: Business Standard