All-Cash Deal Is French Co's 2nd Investment In Indian Broking Space After Geojit
European banking major BNP Paribas will buy domestic online retail broking major Sharekhan for an undisclosed sum of money , although market players said the allcash deal was valued at about Rs 2,200 crore.
Once the deal is completed, this will be the Paris-headquartered BNP Paribas' second major investment in the Indian broking space. It holds a 34% stake in Kochi-based Geojit BNP Paribas Financial Services. Sharekhan has about 12 lakh customers while the corresponding number for Geojit BNP Paribas Financial Services is about 7.5 lakh.
Currently CVCI, the pri vate equity arm of Rohatyn Group, holds 60% in the unlisted Sharekhan, while Baring Asia Private Equity owns 14%, IDFC 10% and Samara Capital 5%. The balance 11% is with the broking firm's employees.Earlier, there were reports that private equity majors Warburg Pincus and General Atlantic were joining hands to buy out the broking firm.
Although at Rs 2,200 crore the deal looks expensive, market players said that Sharekhan has about Rs 1,000 crore worth of cash in its books.
In the last two years since Narendra Modi was announced as the BJP-led political alliance's candidate for the post of Prime Minister, the stock market has been rallying and the sensex in March this year peaked at the 30K level. The rally in the Indian market, backed mainly by expectations of a strong economic revival under Modi's stewardship, has been attracting foreign investors to one of the fastest growing emerging market economies in the world. In February , through a PEto-PE deal, Carlyle bought Destimoney Financial Services from New Silk Route for Rs 1,600 crore. And recently, Canada-based Fairfax made an open offer for a 26% stake in homegrown financial services firm IIFL (formerly India Infoline). The BNP Paribas deal comes within two weeks of the Fairfax announcement.
Currently , BNP Paribas in India offers corporate, retail and investment banking, and also wealth management. The buyout of Sharekhan “will serve as a platform for the group's strategy in India to offer a comprehensive range of products from pure brokerage to asset-based investment services, including mutual funds and savings products“, Joris Dierckx, India chief, BNP Paribas, said in a statement. “The purchase of Sharekhan is a unique opportunity for us to build on our achievements in the Indian market and to further expand our business in India,“ he said.
