First Capital signs deal to buy DNH stock brokers
View(s):First Capital Holdings, a subsidiary of Dunamis Capital, has inked the deal to acquire 100 per cent of stock broking firm DNH Financial Ltd, owned from Environmental Resources Investment, for Rs. 180 million, First Capital CEO – Jehaan Ismail, said.
Dunamis Capital is owned by the Schafter family – the main stakeholder of the Janashakthi Insurance group. “We are very strong on debt, but we do not really have an equities business. This acquisition will help our corporate finance business as we will have distribution and a research functions as well,” he told the Business Times.
He added that this deal will bring them synergies with corporate finance, margin trading and wealth management.
He said that they are getting inquiries from foreigners to invest in debentures in the past few months.
“We are getting calls from securities houses, foreign investment banks, etc and these inquiries have accelerated during the past few month,” Mr. Ismail said. He said that this sort of investment takes a long time, but they have made some headway in this area. He cited Withholding Tax (WHT) – pertaining to the interest income on listed debenture being exempted in the 2013 Budget proposals with a view of developing the local bond market activities – as a major reason for this development.
“This will also induce the local fixed income investors to invest more in tax free listed debentures rather than on other fixed income securities such as Fixed Deposits, etc,” he said. Further, he said that it’s expected the companies will seek listing on the new debenture issues to attract more investors with this initiative.
Having raised close to Rs.6.5 billion during the last year in corporate debt, First Capital has got into ‘securitisation’, which is pooling a group of assets, packaging it and selling it. “This is a type of corporate debt,”he said. He added that First Capital has Rs 4 billion in the pipeline to raise long term funding through securitisation and debentures.
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