Mumbai, Nov. 17: Shikha Sharma, CEO of Axis Bank, today staged a major coup in the investment banking world when the private sector bank announced that it was buying up the investment banking and equities business of Enam Securities Pvt Ltd in an all-stock deal worth Rs 2,067 crore.

Sharma — who took charge of the bank just 17 months ago — has crafted a deal that puts in place the only missing link in Axis’s product portfolio: capital markets and the mergers and acquisition (M&A) practice.

The mega deal will help India’s third-largest private sector bank to pose a major threat to both ICICI Bank and HDFC Bank, both of which have straddled the investment banking and capital markets space.

Enam is one of the country’s powerhouses in the equity underwriting business and M&A advisory services.

Under the terms of the deal, Enam Securities will demerge its investment banking, institutional equities, retail equities and related business such as the distribution of financial products to a wholly-owned subsidiary of Axis Bank. Close to 400 of its employees will move to Axis Bank.

Vallabh Bhanshali, the co-founder and chairman of Enam and a well-known figure in the domestic capital markets, will join Axis Bank’s board as an independent director subject to approval from the bank’s shareholders and the Reserve Bank of India.

Manish Chokhani, a director at Enam, will be the managing director and CEO of the new entity, while Jagdish Master, a co-founder of Enam, will be a board member of the wholly-owned subsidiary.

It will take about four to six months to complete the deal.

While Enam is a privately-held company, its shareholders will receive shares of Axis Bank in the ratio of 5.7 shares for every one they hold. As a result, Enam investors will own about 3.3 per cent of Axis Bank’s enlarged capital.

The deal incorporates a non-compete clause that bars Enam’s founders from entering a similar line of business for five years.

Axis will also be permitted to use the Enam brand name for two years.

Talking to reporters after the deal was signed, Bhanshali asserted that this wasn’t an acquisition but a merger. He said the combination was “unprecedented in character” and was a “fantastic strategic fit’’ that came with minimal overlaps.

Shikha Sharma, who was seated alongside Bhanshali, said Axis Bank had a strong franchise in areas such as corporate banking, project finance, debt capital and markets but it did not have a major presence on the equity side — a gap that Enam will fill.

Thus, the combination is expected to complete the bouquet of products and services for corporate, institutional and individual clients.

“We believe this is a great strategic fit ... great cultural fit,” Sharma said, adding that the deal is subject to regulatory clearances from the Reserve Bank of India and the Securities and Exchange Board of India.

Officials of Axis Bank said with its branch network of over 1,100 and Enam retail’s network, the combined entity was in a position to build a strong retail franchise as well.

Axis Bank reported a growth of 38.28 per cent in its net profit at Rs 735.14 crore for the second quarter ended September 30 compared with Rs 531.64 crore in the year-ago quarter.

Total income was Rs 4,657.49 crore, up 18.63 per cent from Rs 3,925.94 crore a year ago.