BankMuscat SAOG, one of the leading banks in the Gulf Co-operative Council (GCC) region, has entered into an agreement with the Mangal Keshav Group to acquire a 43% stake in the holding company of the Mangal Keshav Group. The Mangal Keshav Group is head quartered in Mumbai and has 20 branches and 220 franchisees at 70 locations across India. The group was set up in 1939 and is one of the oldest security houses in India. With a growing presence in securities trading, commodities trading, insurance broking and IPO/Mutual fund distribution space, the Mangal Keshav Group is one of the top 20 brokers in the country (by market share) and is a member of the National Stock Exchange, The Bombay Stock Exchange, Multi Commodity Exchange of India Ltd, National Commodity & Derivatives Exchange and Dubai Gold & Commodities Exchange. The Group also has an office in Dubai. With this acquisition, BankMuscat has become the first bank from across the GCC region to take a stake in the Indian Securities Sector.
Announcing the acquisition, AbdulRazak Ali Issa, chief executive of BankMuscat SAOG said: “We are extremely excited about our partnership with Mangal Keshav. India has been a focal country for the Bank, as is evident from our commitment to the sub-continent over the past eight years. Having a presence in commercial banking in India through our investment in Centurion Bank of Punjab, we were exploring opportunities in other segments of the financial services sector. Mangal Keshav would be our vehicle for exposure to the high growth Indian securities market.”
As per Morgan Stanley research, the Indian equity markets are experiencing one of the strongest rallies and the trading volumes are expected to double to USD 3.2 trillion in 2010 from about USD 1.6 trillion currently. Morgan Stanley projects the Indian brokerage business revenues to grow to USD 3.9 billion by 2015. It is in recognition of these trends that several leading international banks -- Citi, BNP, ABN Amro, etc -- have announced their foray in the securities business in India.
“BankMuscat, on its part, has been scouting the Indian financial services environment for the past three years and has reviewed various investment opportunities. Mangal Keshav with its 70-year track record and strong retail presence fitted well with our objectives. In line with BankMuscat’s overall investment philosophy, the Bank views this acquisition as a long-term strategic partnership between the two organizations.” Mr AbdulRazak added.
Commenting on the partnership, Paresh Bhagat, chairman and managing director of the Mangal Keshav Group said: “We have been speaking to other suitors including private equity funds for the last two years. What attracted us to BankMuscat was its investment philosophy of long-term strategic partnership.. BankMuscat is keen to partner Mangal Keshav in its growth and the Bank’s investment would jump-start the major expansion plans, which Mangal Keshav has drawn with respect to opening of new branches, getting more channel partners and also offering an online trading platform to its present and prospective clients. Mangal Keshav would also benefit from BankMuscat’s investment banking and asset management capabilities and its widespread presence across the Gulf region, which should give a boost to the NRI and Institutional business of Mangal Keshav.”
The financial due diligence on behalf of BankMuscat was conducted by PriceWaterhouse Coopers, India, while legal due diligence was done by Amarchand Mangaldas, one of the leading Indian legal firms. The transaction is expected to be completed during the first quarter of 2007.