How broking firms are remodelling their business

Broking firms are increasingly seeing merit in a diversified business model. But can everyone make it?

When Prem Watsa first bought a stake in IIFL in FY11, revenue from its broking business made up the bulk of the company’s revenue. However, today, a little over 70% of IIFL’s revenue comes from its non-banking finance business. Watsa has now announced an open offer for a bigger share of IIFL’s ownership pie. For an additional 26% stake in IIFL, Watsa is willing to pay ₹1,621 crore or ₹195 a share, thus valuing the firm at ₹6,234 crore. Assuming the offer is successful, Watsa’s stake in IIFL would rise to 34.7% from 9%.