HSBC Buys Out E*Trade, IL&FS For $261M From Broking Firm IL&FS Investsmart

May 17, 2008 | by Pallavi S

In one of the largest M&A deals in the Indian broking space, HSBC has announced that it would acquire a 73.21 per cent stake of IL&FS Investsmart in an all-cash deal for $261 million (Rs 1,070 crore). IL&FS Investsmart is co-promoted by IL&FS and US online brokerage firm E*Trade, who have exited in the deal.
HSBC is acquiring the stake from both the key promoters. HSBC, via its subsidiaries, will acquire 43.85 per cent from E*Trade and a 29.36 per cent from IL&FS for $241.6 million at a price of Rs 200 per share. Besides the deal value, HSBC will also pay Mumbai-based IL&FS an additional $19.4 million as part of a three-year non-compete agreement. Since IL&FS Investsmart is a listed company, HSBC will have to make a mandatory open offer to acquire up to 20 per cent additional shares.
VC Circle was the first to report about E*Trade exiting the Indian broking house following a hit it took after the subprime crisis in theUS