Provati Insurance Company has bought a 52% stake of brokerage firm HAC Securities to expand its reach into the brokerage business.
Sources said the price of the majority stake of the Dhaka Stock Exchange (DSE) member brokerage firm was Tk4.65 crore, a good deal for the acquirer.
The non-life insurance company, upon signing the share purchase agreement in March this year, has already got the stake transferred to the name of the company on 10 December.
HAC Securities, the 74th member of the DSE, had some 90,000 clients before the stock market crash in 2010-11. Then, a decade-long bearish trend hurt its business and assets.
Now, some 19,000 investors are investing through the brokerage firm, according to an official of the company.
Brokerage firms had been a lucrative target for takeover by the financial firms interested in expanding into capital market services until the market crash at the end of 2010.
Acquiring DSE member firms at Tk50-100 crore was a common event in the late 2000s. The industry, struggling to survive with the extremely poor trading turnover in the stock market, now doesn’t even dream of such a high price for their firms.
The DSE that was seeing over Tk2,000 crore daily turnover in 2010 frequently, now is struggling to take it above Tk1,000 crore a day.
Brokerage firms’ major income is the commission against their trade order execution.
Own portfolio investment performance, recovering margin loans also impact their financial performance, asset quality, and valuation.