History of IL&FS Investsmart Ltd.
Incorporation
The Comp. was set up as Investsmart India Limited, a wholly owned subsidiary of Infrastructure Leasing and Financial Services Limited for carrying on capital market activities such as share & stock broking, underwriting, placement of securities etc. The Comp. was incorporated on September 01, 1997 & received the Certificate of Commencement of Business on October 07, 1997.
Change In the Registered office of Company
IL&FS has set up a financial centre in Bandra Kurla Complex in Mumbai with a view to house all its subsidiaries, ventures etc. at the same place for administrative convenience & to pursue group synergy. Pursuant to this, on June 14, 2000 the registered office of Company was changed from Mahindra Towers, 4th Floor, 'B1 Wing, Dr. G. M. Bhosale Marg, Worli, Mumbai 400 018 to The IL&FS Financial Centre, Plot C-22, G Block, Bandra-Kurla Complex, Bandra [Es], Mumbai 400 051.
Subscription by ORIX Corporation, Japan in 2000
ORIX subscribed to 80,00,000 equity shares in March 2000 representing 27.59% of paid up capital at that point of time. ORIX is an integrated financial services group based in Tokyo, Japan, providing innovative value-added products & services to both corporate and retail customers. With operations in 24 countries worldwide, ORIX's activities include leasing, corporate finance, real estate-related finance & development, life insurance, & investment & retail banking. ORIX is made up of 202 consolidated subsidiaries & 74 affiliates. ORIX has 974 offices in Japan, with 234 locations throughout the United States, Asia, Oceania, Europe, the Middle East and Northern Africa.
Amalgamation of IL&FS Merchant Banking Services Limited [IMBSLs] and DebtonNet India Limited [OILs] with IL&FS In vests mart Ltd [erstwhile In vests mart India Limiteds]
IL&FS, in addition to its core activity of infrastructure financing, was also registered with SEBI as a Category merchant banker since the inception of SEBI [Merchant Banking Regulationss] 1992. Consequent to changes in SEBI regulations on segregating merchant banking from fund based activities, IL&FS set up IL&FS Merchant Banking Services Limited [IMBSLs] as a wholly owned subsidiary. IMBSL was set-up to provide full-fledged merchant banking services & was registered as a Category i merchant banker with SEBI.
IL&FS also had a 50% stake in another Comp. called DebtonNet India Limited [OILs], which was set up along with. National Stock Exchange of India Limited. DIL was set up to provide an automated & transparent platform, using the Internet, for book built debt issuances. Over a period of time DIL had enhanced the scope of platform to provide a wide range of information, news & analytics relevant to the debt market.
With a view to consolidate IL&FS interests in the capital markets IMBSL & DIL were merged into the Investsmart India Limited. Prior to this, IL&FS had taken over the 50% stake of National Stock Exchange of India Limited in DIL. The scheme of amalgamation was approved by the High Court on August 01, 2002 & was effective from January 01, 2002.
Benefits of Merger
The main benefits of merger of IMBSL & DIL with IL&FS Investsmart Limited were as follows:
1. The merger resulted in making available to the parties the benefit of financial resources & the expertise of each other.
2. The activities undertaken by three companies were supplementary and complementary to the activities of each other. It was felt that it would be advantageous to combine the activities of all the three companies in to a single company. The merger of IMBSL & DIL with IL&FS Investsmart Limited would provide synergy besides economies in costs by combining total business functions & the related activities and thus contribute to the profitability of amalgamated company.
3. All the three companies had within themselves the wholesale and retail relationships & multiple resources capabilities that could be better leveraged under a common umbrella.
4. IL&FS Investsmart Limited was primarily focused on the retail segment through its broking & other distribution activities, IMBSL was focused on wholesale & institutional segments of financial market & DIL was focused on the wholesale & institutional segments of the debt market. It was expected that the amalgamated Comp. would have diversified income profile insulating itself from adverse market conditions & have better competitive positioning.
5. It was also expected that the amalgamated Comp. would have the benefit of combined resources, man-power & cash flows of all the three companies It was envisaged that with the enhanced capabilities and resources at its disposal, the amalgamated Comp. would have greater flexibility to market & meet customer needs & compete more effectively, thus strengthening the position of merged entity.
6. IL&FS Investsmart Limited had a first level contact with retail customers, which included senior corporate employees & members of their management team. It was envisaged that a complete integration would provide immense relationship spin offs & provide a sound foothold for Investment banking business. Concomitantly, IMBSL & DIL held corporate & institutional relationships. Personal investment planning & advisory services for their senior personnel were expected to deepen the relationship with the corporates & enable IL&FS Investsmart Limited to make an entry within the corporates for other retail business.
Valuation & Share Swap Ratio
The valuation was approved by High Court, Mumbai & the share swap ratio for transaction was arrived at based on the value of Rs. 35, Rs. 15 & Rs. 12 per share respectively for IL&FS Investsmart Limited, IMBSL & DIL. A share swap ratio of 3 shares of IL&FS Investsmart Limited for every 7 shares of IMBSL & 34 shares of IL&FS Investsmart Limited for every 100 shares of DIL was arrived at, & the same was approved by board of directors & shareholders of respective companies.
Sale & Lease back of property from IL&FS
The Comp. had purchased office premises for its registered office from IL&FS in September 2001 through two separate agreements for a total consideration of Rs 2382.66 lakhs. Out of these two agreements, one agreement covering an area of 7010 sq ft was entered into with IL&FS Merchant Banking Services Limited [which was subsequently merged with IL&FS Investsmart Limiteds] for a total consideration of Rs 736.05 lakhs. The other agreement covering an area of 15682 sq ft was entered into with Investsmart India Limited for a total consideration of Rs 1646.61 lakhs.
On January 30, 2004, the Company, through a Sale Deed sold the entire area aggregating 22692 sq ft for a total consideration of Rs 2541.50 lakhs to IL&FS. The Comp. has subsequently entered into business services agreements dated April 23, 2004 & December 31, 2004 with IL&FS pursuant to which it occupies the said premises.
Purchase of Property
No property which the Comp. has purchased or acquired or propose to purchase or acquire which is to be paid for wholly or partly out of the proceeds of present Offer or the purchase or acquisition of which has not been completed on the date of this Red Herring Prospectus, other than property in respect of which :
* the contracts for purchase or acquisition were entered into in the ordinary course of business, & the contracts were not entered into in contemplation of Offer nor is the Offer contemplated in consequence of contracts; or
* the amount of purchase money is not material; or
Except as stated on page 91 of this Red Herring Prospectus, the Company has not purchased any property in which any of its promoters and/or Directors, have any direct or indirect interest in any payment made thereof.
Change in name of Comp. from Investsmart India Limited to IL&FS Investsmart Limited
Pursuant to the merger of IMBSL & DIL with Investsmart India Limited, the stake of IL&FS increased from 53.33% to 60% & consequently IL&FS became a major shareholder of Company. Further to reap the benefits of IL&FS brand & parentage, it was proposed to change the name from Investsmart India Ltd to IL&FS Investsmart Limited. A fresh certificate of incorporation was issued by Registrar of Companies consequent to change of name on March 25, 2003.
Induction of Strategic Investors
SAIF Investment Comp. Limited, Mauritius
SAIF has acquired 20% equity stake in 2004-05 in the Company. SAIF is a wholly-owned subsidiary of Softbank Asia Infrastructure Fund [SBAIFs]. SBAIF is a leading Asian private equity firm headquartered in Hong Kong. SBAIF is a strategic joint venture between Softbank Corporation and Cisco Systems that was formed in early 2001 to make investments in information technology, media, & telecom related companies based [or with significant operationss] in the Asia Pacific region. SBAIF focuses its efforts primarily on China, India & Korea. Cisco Systems, Inc. is the sole limited partner of Fund & has committed $404 million in the first of series of funds. Over the years, Softbank has made investments in E*TRADE FINANCIAL, Yahoo!, UTStarcom, Shanda, Sify Limited, and Intelligroup.
E*TRADE Mauritius Limited [ETMs]
ETM acquired 13.94% equity stake in the Company. E*TRADE Mauritius Limited, is a wholly-owned Mauritius based subsidiary of Converging Arrows, Inc formed & existing under the laws of Nevada, which in turn is wholly-owned subsidiary of E*TRADE FINANCIAL Corporation.
E*TRADE FINANCIAL provides financial services including brokerage, banking & tending for retail, corporate & institutional customers. With 2.7 million households & 3.5 million customer accounts worldwide, U.S.-based E*TRADE FINANCIAL Corporation operates branded web sites in 12 countries.
MAJOR EVENTS IN THE HISTORY OF THE COMPANY
Year Event
1997-1998 * February 1998: Commenced equity broking on NSE
1998-99 * Commenced branch operations for retail businesses at Bangalore, Chennai & Kolkata.
1999-2000 * August 1999: Commenced equity broking on BSE * March 30, 2000: ORIX subscribed to 80,00,000 Equity Shares * March 30, 2000: K. Raheja group subscribed to 30,00,000 Equity Shares * Launched a fully functional website : www.investsmartindia.com 2000-2001 * April 14, 2000: Change in the registered office of the Company * June 2000: Commenced derivative broking on NSE * January 2001: Launched investment advisory products. * Set up a dedicated mutual fund desk & fixed income retail desk at branch locations. * Received SEBI registration as a Portfolio Manager 2001-2002 * January 01, 2002 : Merger of IL&FS Merchant Banking Services Limited [IMBSLs] & DebtonNet India Limited [DILs] with the Company * Foray into insurance distribution through setting up of wholly owned subsidiaries i.e. Investsmart Insurance Agency Pvt. limited & Investsmart Insurance Distribution Private Limited as Corporate Agents of HDFC Standard Life Insurance Comp. Limited & Life Insurance Corporation of India respectively 2002-2003 * March 25, 2003 : Change in name of Comp. from Investsmart India Limited to IL&FS Investsmart Limited
2003-2004 * Registered as an Underwriter with SEBI * Acquired 4 branches of Tata TD Waterhouse Securities Pvt. Limited along with assets. * Incorporated a wholly owned subsidiary, IL&FS Investsmart Commodity Brokers Limited * Acquired IL&FS Academy for Insurance & Finance Limited [Formerly known as SAIFA Training Academy Limiteds]
2004-2005 * Induction of ETM & SAIF as strategic investors * Commenced derivative broking on BSE * IL&FS Investsmart Insurance & Risk Management Services Limited [formerly Investsmart Insurance Distribution Private Limiteds] applied for insurance broking license which is currently pending with IRDA
* Name of SAIFA Training Academy Limited was changed to IL&FS Academy for Insurance & Finance Limited
* Commenced commodities broking business through wholly owned subsidiary, IL&FS Investsmart Commodity Brokers Limited
2007
- IL&FS Investsmart Ltd has informed that Mr. Mitchell Caplan, Chief Executive Officer & Director of E*TRADE FINANCIAL Corporation, USA has been appointed as an Additional Director on the Board of Company.
2008
-IL&FS Investsmart Ltd has informed that Mr. Gregory Framke has been appointed on the Board of Comp. in the meeting of Board held on February 28, 2008 subject to completion of regulatory procedures including obtaining Director Identification Number [DINs].
