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Religare Broking Investor Presentation

Religare Broking Investor Presentation






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    Religare Broking Investor Presentation Religare Broking Investor Presentation Presentation Transcript

    • Proposal for Potential Business Partners Religare- Equity & Commodity Broking
    • Section 1 RELIGARE ENTERPRISES LTD – ABOUT US One of India‟s fastest growing business groups Promoter Group Religare Enterprises Ltd (“REL”) Section 2 – An overview Healthcare Financial Services REL is building an emerging markets business anchored in India Financial services is one of two focus areas for the Singh Financial brothers, Founders of the Group Hospitals Diagnostics Retail IT Services 3. The Founders have an established track record of three Fortis Super Religare Dion Religare generations of successful entrepreneurship and value Healthcare Religare Wellness Technologies Enterprises creation Laboratories Limited Established in 1994, the financial services business was India‟s second India‟s leading Well Technology India‟s leading reinvigorated in 2001 with the induction of the current Section 3 largest diagnostics established company financial services management team that has since successfully built a healthcare company pharmacy focused on group with a leading franchise in India services with over 175 chain with 130 software global footprint provider; network stores across products for The Founders have invested substantial capital of over building a pan - laboratories India financial ` 2700 cr to build the franchise; currently hold approx. Asia healthcare and over 875 services with 70% stake platform collection presence across centers 11 countries REL‟s IPO (2007) was one of the most successful in the history of the Indian stock market and was oversubscribed 159 times (1); current market capitalisation of ` 6500 cr (2) Section 4 Listed Listing Unlisted Listed Listed Market Cap: Document Market Cap: Market Cap: ` ~6500 cr Filed ` 260 cr ` ~6500 cr(1) Source: Prime Database(2) Market Cap as at May 27, 2011; Source: BSEABOUT RELIGARE GROUP
    • OUR VISION – ANCHORED IN INDIA AND BUILDING Section 1 1 Section A LEADING EMERGING MARKETS FINANCIAL SERVICES BUSINESS Section 2 1 Robust Indian growth story providing solid breadth and depth to the Integrated Indian Financial financial services sector resulting in rapid growth of profit pools Services Platform VISION 4. “To be the leading emerging markets financial services group 2 driven by innovation, delivering Emerging Markets superior value for all Increasing weight and growing integration of emerging markets as Investment Banking Section 3 drivers of global economic growth stakeholders globally” Platform 3 Opportunity to create value by building a multi-boutique asset Global Asset Management management platform providing access to capital and alpha in Platform Section 4 emerging marketsABOUT RELIGARE GROUP
    • Section 1 1 Section OVER THE LAST 9 YEARS WE HAVE EVOLVED INTO A LEADING FINANCIAL SERVICES PLAYER… 4% 2% 5% 41% 16% Broking Wealth Management Indian Asset Management Significant Growth in Section 2 Platform Lending Life Insurance Others REL over the last 10 years has: * Indicates summation of revenues of standalone business Diversified from a pure-play retail broking business into an 3% 2% integrated financial services 32% platform 67% 28% Health Insurance 5. Achieved leading market position across various Investment Banking business verticals including retail broking and lending Global Asset Section 3 Been amongst the fastest Management growing financial services 31% business in India Domestic Asset Domestic Asset Management Management 69% Developed a pan-India footprint with presence across Life Insurance Life Insurance 566 cities and 2,163 locations Wealth Wealth Management Management Made significant progress in 100% building its emerging markets Section 4 Lending Lending Lending franchise Broking Broking Broking Broking 2003 2006 2008 2010ABOUT RELIGARE GROUP
    • Section 1 1 Section ...OFFERING ONE STOP FINANCIAL SERVICES FRANCHISE Religare Securities Limited Integrated Indian Financial Services Platform BROKING One of India‟s largest retail and commodities broking platform Distribution across 556 cities and 1926 locations Section 2 Over 800,000 clients; over 525,000 daily trades Best-in-class risk management capability AEGON Religare Life Insurance Religare Health Insurance INSURANCE Life Health JV with AEGON; an international life First stage approval received insurance, pension and investment Strong banking equity partners; Union Bank of India and company Corporation Bank 6. Strong growth; volume doubled in Potential access to forty million customers one year Leverage Group‟s healthcare assets Religare Macquarie Wealth Management WEALTH JV with Macquarie - a global provider of banking, financial, advisory, investment and funds management services Section 3 MANAGEMENT Open architecture platform provides competitive advantage Robust client base with significant growth in AUM of 32% CQGR over the last 5 quarters Focus on high quality annuity based earnings Religare Asset Management ASSET India‟s 14th largest asset management company; AUM of ~ ` 10,500 cr MANAGEMENT Three fold increase in AUM since the acquisition of Lotus Asset Management in 2008 Focus on increasing profitability by winning offshore mandates Section 4 Religare Finvest Limited LENDING One of India‟s largest NBFC‟s focused on SME Capital Markets funding Loan book of approx. ` 6800 cr y-o-y growth of 134% High quality portfolioABOUT RELIGARE GROUP
    • Section 1 1 Section ...THROUGH OUR INVESTMENT BANKING & GLOBAL ASSET MANAGEMENT PLATFORM Build a “go-to” advice and execution platform for emerging markets investors Section 2 Emerging Markets Investment Banking Platform Team build out complete; over 250 professionals, 10 countries Three strategic acquisitions executed; CJE (trading as “Aviate Asia”), BJM (US & UK) and Bartleet Mallory Stock Brokers (Sri Lanka) Stock coverage expanding rapidly; over 200 companies tracked in India and internationally 8. Accelerated built out of distribution; over 520 empanelment including 364 global empanelment Section 3 Global Asset Acquisition of Northgate Capital and Landmark Partners(1) - valuable assets added to the portfolio Management Platform AUM of over approx. ` 50,000 cr Distribution roll-out in Japan completed Cross leverage the global asset management platform for distributing the India centric funds to the overseas Section 4 investors and provide global investment opportunities to the domestic investorsABOUT RELIGARE GROUP
    • Section 1 WE HAVE ONE OF INDIA’S LARGEST OWNED RETAIL DISTRIBUTION NETWORKS Pan India Presence Section 2 Cities Locations 2092 2209 1853 1464 455 503 557 579 10. FY08 FY09 FY10 FY11 Section 3 Broking Branch Network & Franchisees +16% 1962 1747 1481 1273 Section 4 FY08 FY09 FY10 FY11ABOUT RELIGARE RETAIL BROKING GROUP
    • WE HAVE DELIVERED STEADY PERFORMANCE Section 1 OVER THE YEARS IN SPITE OF CHANGE IN CYCLES Significant growth in No. Strategic Highlights Broking Revenues (` Cr) +185% of Customers +1,455% Section 2 Commodities Commodities Despite falling yields, due to change in volume mix 442 920,621 Equities Equities towards F&O, the broking revenue has remained 780,430 steady on the back of consistent volume growth 370 Ability to provide funding through the lending business provides competitive advantage 155 LAS book size of ` 850 Cr as on March 31, 2011 143 Structural increase in retail penetration leading to 59,222 11. 72 140,191 secular growth 56,290 12 2,932 Leadership position in the retail segment; well poised to exploit growth potential FY07 FY11 FY06 FY11 One of the widest distribution platforms in the Section 3 industry Total No of Equity Trades („000) Equity Sales & Dealing Team (#) Tested risk management and operating platform +147% +37% that has weathered multiple cycles 503 2,915 2,127 204 Section 4 FY06 FY11 FY06 FY11ABOUT RELIGARE RETAIL BROKING GROUP
    • Section 1 WE ARE AMONG THE LEADING RETAIL BROKERS IN THE COUNTRY No of Branches & Franchisees Awards & Accolades Section 2 Branches Franchisees 1800 500 1566 396 12. 1500 30 D&B Award for Best Broking House with Global Presence in 2010 Section 3 No of Customers, ‘000 1004 780 Section 4 Best Commodity Broker of the Year at 628 Bloomberg UTV Financial Leadership India Best Market Analyst Award Awards, 2011 – Zee BusinessSource- D&B Survey “India‟s Leading Equity Broking Houses 2010”ABOUT RELIGARE RETAIL BROKING GROUP
    • WE LEVERAGE OUR INSTITUTIONAL RESEARCH Section 1 PLATFORM TO PROVIDE INSIGHTS AND MARKET REPORTS TO OUR BUSINESS PARTNERS Institutional Research Coverage Strength Sample Industry Research Reports Section 2 SECTOR No. of Cos AUTOMOBILES & ANCILLARIES 11 BANKING & SPECIALTY FINANCE 18 CAPITAL GOODS 16 CEMENT 11 CONSTRUCTION & INFRASTRUCTURE 12 CONSUMERS 16 13. INFORMATION TECHNOLOGY 21 LOGISTICS 3 MEDIA 9 METALS 9 Technical & Derivative Research Reports Section 3 OIL & GAS 11 PIPES 3 POWER 7 PHARMACEUTICALS 15 REAL ESTATE 12 TELECOMMUNICATIONS 8 OTHERS 3 Total 185 Section 4 Leverage our Institutional Research platform to provide market insights Provide more than 15 research reports to Business Partners Including Technical, Intra-day, Industry, Earnings etc.ABOUT RELIGARE RETAIL BROKING GROUP
    • Section 1 WE OFFER OUR CLIENTS A FULL FINANCIAL PRODUCTS SUITE Section 2 Equity Broking Commodity Broking Currency Broking Mutual Funds Insurance E-Gold & E-Silver 14. Section 3 Capital Market Systematic Investment Plans Easy Gold Funding Section 4 Swarn Mudra (Gold Institutional & Retail Research Coins)ABOUT RELIGARE RETAIL BROKING GROUP
    • WE CONTINUE TO ADD NEWER PRODUCTS Section 1 TO OUR SUITE TO DIVERSIFY THE OVERALL PORTFOLIO MIX Description Section 2 We provide an excellent opportunity to our clients to expand into other asset classes, diversify their portfolios and use currency Currency Trading markets to compliment their equity and commodity trading. Since its inception, the currency futures market has grown by leaps & bounds 15. Our wide range of services enable investors to broaden their portfolio continuum , while managing risk through transparent Mutual Fund Service process. With our Mutual Fund Service System , an order collection system provided by National Stock Exchange, you can place System subscription or redemption request for mutual fund units Section 3 We provide a unique product to purchase of physical Gold in monthly installments for delivery after 1 or 2 years . The rate of gold Easy Gold is fixed at the time of entering into the contract with Religare. Retail investors can purchase gold by paying for it over a period of time. The investor gets pure gold bar/coins of international standard of 999 purity. Allows purchase & sale of base and precious metals in the dematerialized form. Physical delivery available on demand at select Section 4 E-Spot locationsABOUT RELIGARE RETAIL BROKING GROUP
    • Section 1 STATE-OF-THE-ART Operations Risk Management Section 2 17. Account opening within 3 days Trading in mutual funds through MFSS system. The client will get margin benefit on dematerialized MF units based on applicable hair cuts Online account opening tracker for BP to view the real time status updation Offer a module by which Business Partner can avail intraday limit based on Section 3 client liquidity without calling the Risk official on near to real time basis Instant visibility to the necessary information with respect to clients managed by BP for client‟s ledger, net positions etc The position of the client are uploaded on the trading application for providing Daily updation of accrued brokerage to BP (Gross Brokerage & Net Brokerage) information to BP about client holding and MTM on holdings. and funds payout / stock payout within 24 hours for the clients Real time intraday trade confirmation and intraday position of all their clients on web back office. Intra-day funds payout for preferred clients – instant funds transfer to meet any exigencies Business partner can take print of the ledger statement/trade confirmation etc. Section 4 for their client through LD diet.ABOUT RELIGARE RETAIL BROKING GROUP
    • Section 1 WE HAVE BUILT A VERY STRONG BUSINESS PARTNER CHANNEL OVER TIME No. of Business Partners/Franchisees, # Section 2 1,671 +81% 1,473 1,161 669 19. 155 FY07 FY08 FY09 FY10 FY11 Section 3 Client Base from Business Partners, # +41% 193,242 168,371 136,672 107,341 Section 4 48,489 FY07 FY08 FY09 FY10 FY11OUR PROPOSITION FOR BUSINESS PARTNERS
    • Section 1 WHY SHOULD YOU TIE-UP WITH RELIGARE? Section 2 Reliability Convenience 20. Key Value Proposition Section 3 for BPs Personalization Knowledge Section 4OUR PROPOSITION FOR BUSINESS PARTNERS
    • Section 1 Convenience WHY SHOULD YOU TIE-UP WITH RELIGARE? Key Value Proposition Snapshot of our Platform/Other Services Section 2 ODIN DIET Offline Platform Superior technology to create enriched trading experience Online platform – Race Lite/Pro ODIN (Developed by Financial Tech) Offline platform – Pan country branch network „Call N Trade‟ desk for online clients 21. Online funds transfer through various banks. Payout to BPs within first week of the month (More than 90% fund transfers through RTGS) Online Platform (RACE- Lite/Pro) Multiple stocks tracking facility on a single screen Section 3 E-contract notes & SMS confirmations of daily trades State of the art web based back office support (Single window login) 24 X 7 Technical support incase of any system downtime Back-Office Platform LD DIET Online portfolio tracker and fund transfer Section 4OUR PROPOSITION FOR BUSINESS PARTNERS
    • Section 1 WHY SHOULD YOU TIE-UP WITH RELIGARE? Knowledge Key Value Proposition Research Reports in Circulation Section 2 Strong research capabilities Incisive retail research reports across multiple segments Daily Newsletter Technical & fundamental research led inputs More than 15 types of reports in circulation to Business Partners. The set of reports shared with BPs includes Daily Newsletter/Quarterly Earnings/Company Update/IPO Note/Industry 22. Insights/Market Explorer/BSE-500 52 week low etc Research, alerts, notifications on SMS Weekly/Monthly/ Reinforcing client connect via „Making of an Informed Investor‟ initiative Quarterly Section 3 Reports Chat with Market experts All round training & Business Partner support program Industry/Other Misc Reports Section 4OUR PROPOSITION FOR BUSINESS PARTNERS
    • Section 1 WHY SHOULD YOU TIE-UP WITH RELIGARE? Personalization Key Value Proposition Snapshot of our Services Section 2 Posters/Danglers/Standee/Banner/Canopy/Welcome Kit Our Branch Managers work with Business Partners to support growth of the business Business Partner Desks extend the required operational support to BPs Varied Brokerage plans to suit market participants of all kinds Regular reward and recognition programs to motivate business partner 23. Electronic Direct Mailers Marketing & Branding Support (Glow sign boards/Visiting cards/Product brochures and collaterals/Periodic seminars & investor education meet) Section 3 Seminars/Trainings/Investor Education Meet Section 4OUR PROPOSITION FOR BUSINESS PARTNERS
    • Section 1 Reliability WHY SHOULD YOU TIE-UP WITH RELIGARE? Key Value Proposition Snapshot of our Services Section 2 Dedicated Customer Desk & IT Support Centralized online risk management cell-Special module by which BP can avail intra-day limit based on client liquidity without calling to the Risk official Strong brand association enhances credibility 24. Presence across 1500 locations Dedicated desk to service Private Clients Group Section 3 Secured Payment Gateway & Real Time Streaming Dedicated customer desk & IT support a call away Payment gateway & trading platform secured by VeriSign ® Real-time streaming quotes with instant order execution & confirmation Robust infrastructure to ensure a seamless & transparent payout structure Section 4OUR PROPOSITION FOR BUSINESS PARTNERS
    • Section 1 GUIDING PRINCIPLES OF OUR PROPOSED STRUCTURE TO BUSINESS PARTNERS Section 2 We believe that our Business Partners/Franchisees are extremely critical stakeholders for the success of our equity & commodity broking business We would like to build a long term partnership with them and help them being successful in this journey 26. The market practice of offering incentives based on only short term performance is not a sustainable model to grow this channel and neither does it create value for our Business Partners Our Business Partners should be an integral part of our success story Section 3 To create a long term relationship, Business Partners should be offered shares of Religare Enterprises Limited (REL) (without any cash consideration), hence they gradually become co-owners than just being a partner We would like to accomplish this dream and work with our Business Partners to deliver what is takes to become co- owners Section 4UNIQUE OFFER TO BUSINESS PARTNERS
    • Section 1 COMPARISON BETWEEN RSL’s UNIQUE OFFER ILLUSTRATION V/S THE MARKET PRACTICE Market Practice for Commissions Payout to BPs Exclusive Offer to RSL’s Business Partners Section 2 Total Gross brokerage Income from BP Total Gross Brokerage Income from BP Franchisor Brokerage Retention (% of Gross brokerage) RSL Brokerage Retention (% of Gross brokerage) 27. Net Brokerage Income to Business Partner Net Brokerage Income to Business Partner during the year Section 3 Offer Religare Ltd stocks equivalent to Net Brokerage income to RSL in the 3rd year (post agreement) Up to 300% of total brokerage earned by RSL through the BP in the 3rd year of association Section 4 Total Income to Business Partner* Basis the defined criteria agreed on the Term SheetUNIQUE OFFER TO BUSINESS PARTNERS
    • Section 1 BUSINESS PARTNER COMMISSION PAYOUT ILLUSTRATION STRUCTURE Total Brokerage BP Payout Section 2 Commissions Payout to BPs Cash payout of ` 140 (3rd year commission) + REL stocks worth 495 180 (3 * RSL payout of ` 60 for the third year) 320 200 450 28. 150 100 105 70 Section 3 Year 1 Year 2 Year 3 Overall (in 3 Years) Overall payout to Business Partner in 3 years can be greater than 100% of the total gross brokerage generated Monthly payout of BP commissions to continue on cash basis Up to 300% of total brokerage earned by RSL through BP in the 3rd year of association, subject to BP meeting his 1st & 2nd year brokerage targets Section 4 (determined as per the SEBI guidelines)* Basis the defined criteria agreed on the Term SheetUNIQUE OFFER TO BUSINESS PARTNERS
    • Section 1PROPOSED STRUCTURE - KEY POINTS Section 2 BPs shall have an agreed revenue sharing arrangement which will be as per the current business practice To create a long term incentive, BP‟s will be offered shares of Religare Enterprises Limited (REL) after 3 years from the date BP moves on to RSL platform (Start Date) for no additional cash consideration from BP. The quantum of shares offered to BP will be linked to the performance of BP for the third year from the Start Date. 30. At the time of enrollment of this scheme, RSL and BP will agree upon: Gross Brokerage (GB) of BP for the 3rd year from Start Date (Benchmark GB). The Benchmark GB number will be mutually agreed upon based on the BP‟s current trailing twelve months GB with competition Section 3 Net Brokerage (NB) earned by RSL for the 3rd year from Start Date, which will be shared with the BP in the form of REL shares (Benchmark NB). Benchmark NB will be calculated as per the formula below Benchmark NB = Benchmark GB * RSL revenue share * {% of Net Brokerage earned by RSL in 3rd year from the Start Date which needs to be shared with BP in the form of REL shares } This minimum GB will be calculated based upon a mutually agreed % of Benchmark GB. Incase, BP don‟t earn this minimum GB in year 1&2 then BP will not be eligible for REL shares at the end of year 3 from Start Date Section 4
    • Section 1 CALCULATION OF THE TOTAL STOCK BENEFIT ILLUSTRATION FOR BP… Particulars Details Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Section 2 Gross Brokerage from Clients* In ` Lacs 50 54 58 RSLs Share of Gross Brokerage In % 30% 30% 30% BPs Share of Gross Brokerage In % 70% 70% 70% 31. Brokerage earnings for RSL In ` Lacs 15 16.2 17.5 Brokerage earnings for BP In ` Lacs 35 38 41 Section 3 Maximum payout due (assumed at 300%) In ` Lacs 52 Assuming a 20% rate of Value of REL stocks held 63 76 91 growth of REL stock Assuming a 20% rate of Value of REL stocks held 66 82 103 growth of REL stock Assuming a 20% rate of Value of REL stocks held 68 89 115 growth of REL stock Section 4* Assuming a CAGR of 8% for Gross Brokerage* The price of shares to be offered to BP will be based on then prevalent REL market price as determined by the SEBI ICDR guidelines (Allotment Price) at the time of issuance of shares to BP
    • Section 1TERMS & CONDITIONS The price of shares to be offered to BP will be based on then prevalent REL market price as determined by the SEBI ICDR guidelines (Allotment Price) at the time of issuance of shares to BP (i.e. post 3 years from the Start Date). This is to clarify that this Allotment Price will be used to determine the quantum of shares to be offered to BP, however BP‟s will not be Section 2 paying this price for the shares to be issued to them BP will not offer the services being rendered to RSL under the business partnership for a period of 2 years in the event of the termination of this partnership contract between BP and RSL. On termination of the business partnership contract between BP and RSL, BP, for a period of 2 year, shall not solicit business for any product or service from the clients who were serviced by it and shall also dissociate itself from the clients referred/introduced to RSL or mapped by RSL to the BP 32. Any tax payouts or consequences related to transfer of shares shall be borne by the BP Section 3 Section 4
    • Thank You