IIFL Holdings Ltd is heading for a three-way split to create two new entities, IIFL Wealth and IIFL Securities, and get all the companies listed on the bourses, according to a stock-exchange disclosure.
The company proposes to reorganise and segregate the businesses into three different listed verticals, dealing in loans and mortgage business, wealth management services and capital market business.
Besides, IIFL Holdings said that its non-banking financial subsidiary, IIFL Finance, and IIFL Media and Research Services, will be merged with the parent.
IIFL Securities, which will be created after the demerger, will deal with the capital markets, and include investment banking, insurance broking, securities and commodities broking, real estate broking and advisory and portfolio management services.
The turnover of IIFL Holding’s securities business was Rs 88.13 crore in 2016-17, and contributed 45.8% to the company’s total turnover. Shareholders of IIFL Holdings will get one share of IIFL Securities for every share of the parent company.
After the demerger, the wealth business will include the investment advisory division and wealth management service offerings for corporate clients
The unit had contributed Rs 27 crore to IIFL Holding’s total revenues in 2016-17. Shareholders of IIFL Holdings will get one share of IIFL Wealth for every seven shares of the parent company.
According to the disclosure made by IIFL Holdings, the nature and competition involved in each of the businesses is distinct from others and consequently each business or undertaking will be capable of attracting a different set of investors, strategic partners, lenders and other stakeholders.
“Financial services industry is poised for an exponential growth driven by domestic growth, demonetization and digitization. The incumbent players are being challenged by new entrants like never before,” said Nirmal Jain, founder and chairman, IIFL Group, adding that the reorganisation will help the group seek growth opportunities amid intensifying competition.
As on December 2017, Fairfax India Holdings held a 35.49% stake in IIFL Holdings. In comparison, the promoters held 29% in the entity. In February 2017, Fairfax India had picked up a 5% stake for Rs 507 crore ($75.36 million).
The company’s consolidated income stood at Rs 2,773 crore and profit before tax was Rs 1,219 crore for the nine months to December 2017, while IIFL Finance’s loan assets was at Rs 27,288 crore.