IIFL Securities online retail trading biz to merge with 5paisa Capital

New Delhi: Discount broking firm 5paisa Capital Ltd on Wednesday said it has decided to merge IIFL Securities' online retail trading business with itself.

The reorganisation between the two IIFL Group entities aims to consolidate the online retail trading businesses under one single entity, 5paisa Capital said in a statement.

The boards of 5paisa Capital Ltd and IIFL Securities Ltd approved the transfer of IIFL Securities' online retail trading business to 5paisa Capital. This is subject to regulatory approvals.

Consequent to the transaction, about 1.5 million customers of IIFL Securities undertaking online trading business will be hived-off to 5paisa Capital. This will lead to 5paisa Capital's customer base increasing by over 40 per cent to over 4.7 million customers.

Besides, 5paisa Capital will have strategic advantages in terms of increased customer base and revenues, including cross-selling and profitability.

"With an increased customer base, we will be able to significantly boost revenue potential with less incremental cost," Prakarsh Gagdani, CEO, 5paisa Capital, said.

At the same time, IIFL Securities will sharpen its focus on private client group, primarily targeting clients with financial assets above Rs 1 crore.

"IIFL Securities also plans to expand and digitally empower its base of franchisee / sub-brokers to target and service clients with Rs 1-10 million worth of financial assets and looking for personalized services," the statement noted, adding that clients with less than Rs 10 lakh of financial assets would be best served by the digital and online offerings of 5paisa Capital.

In lieu of this transfer, IIFL Securities shareholders will receive 1 share of Rs 10 paid up of 5paisa Capital for every 50 shares of Rs 2 paid up of IIFL Securities held by them as on the record date.

"With this reorganization, the group serves all segments of customers for their varied and specific requirements, with distinct brand and corporate entities. We expect significant cost savings by removing the overlap in the group businesses as well," said R Venkataraman, chairman and managing director of IIFL Securities.

IIFL Securities is one of the leading capital market players in the financial services space with assets under management of Rs 1.18 lakh crore. It operates in four distinct strategic business units -- online retail trading, private client group, institutional equities and investment banking.