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BNP Paribas buys Sharekhan for about Rs 2,000 cr; gets 1.2 mn clients in one go

Mumbai - French banking giant BNP Paribas on Thursday acquired homegrown brokerage firm Sharekhan in an estimated Rs 2,000 crore deal, as it seeks to expand retail broking operations here.

The Mumbai-based Sharekhan began operations in 2000 and is one of the largest independent retail brokers with about 1.2 million clients.

Though the companies did not disclose the deal value, sources in the know said, the deal size is estimated to be Rs 2,000 crore.

BNP sees a large potential for growth in the domestic brokerage sector, as the retail investors are only about 1.5 per cent of the households, against around 10 per cent in China and 20 per cent in the US.

It can be noted that both the Sensex and the Nifty surged over 40 per cent since the start of 2014 on expectation that the new government will bring back growth to a higher trajectory.

 BNP Paribas buys Sharekhan for about Rs 2,000 cr; gets 1.2 mn clients in one go

Reuters

Though the market had scaled past 30,034 and 9,400 peaks in March, it has come of the highs due to a slew of tax issues and the lagging growth engine since then.

The deal to buy Sharekhan marks BNP's second big play at retail broking in the country after its 2007 investment in the Kochi-based Geojit Securities.

Following the BNP investment for 34 per cent, Geojit was renamed BNP Geojit Paribas Financial Services and has now about 7,50,000 retail clients.

BNP's financial offerings in the country include corporate and retail banking, investment banking and wealth management.

"Sharekhan will serve as a platform for our India strategy to offer a comprehensive range of products from pure brokerage to asset-based investment services including mutual funds and savings products," BNP Paribas India country head Joris Dierckx said in a statement.

"Sharekhan will serve as a platform for the group's strategy here to offer a comprehensive range of products," Dierckx added.

Sharekhan will join BNP Paribas' personal investors division, which is a key player in retail broking and digital banking services with 1.7 million clients across Europe, the French firm said in a statement.

"The deal is a unique opportunity for us to build on our achievements in the Indian market and to further expand our business here," Dierckx added.

With 7 per cent market share in terms of number of accounts, Sharekhan was the first independent and third retail brokerage in the country, the statement said.

"Internet-focused since its creation in 2000, Sharekhan is today one of the most well-known online brands here and has been constantly profitable over the last 12 years," it added.

BNP Paribas has a presence in 75 countries with more than 1,85,000 employees, including 1,45,000 in Europe.

The French group is engaged in retail banking and services comprising domestic markets and international financial services as well as corporate and institutional banking.

"We are very pleased to welcome all Sharekhan staff and clients into our group," Dierckx said.

The pure-play brokerage had been on the block for some time and many suitors, including leading PEs were said to be keen to get on board.

Sharekhan claims a 7 per cent market share in terms of number of investor accounts with 1.2 million clients. The firm is one of the few pure-play brokerages in the country as most others got into lending, asset management, and other businesses.

Sharekhan, earlier known as SSKI Investor Services, was set up in 1995, and started broking business to non-institutional clients in 2000.

Originally promoted by Shripal Morakhia and Shreyas Morakhia, it had raised fund from HSBC Private Equity, Intel Pacific Inc and Carlyle in 2000. In April 2006, GA Global Investments had entered by acquiring the equity holding of Carlyle in the firm.

One year later in 2007, Samara Capital and IDFC had acquired about 75 per cent stake by picking up stakes owned by GA Global Investments, HSBC Private Equity, and the Morakhias.

PTI

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Updated Date: Jul 31, 2015 08:12:18 IST

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