BNP Paribas to acquire brokerage firm Sharekhan

Revenue in the French retail banking division declined by two percent in the second quarter, however, which Machenil attributed to the continuing low interest rate environment. 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.

The Mumbai based firm was incorporated in February 2000, which was set up by the Morakhia family, has 160 branches and 13 lakh retail investors, while ICICI Direct and HDFC Securities have 30 lakh and 17-18 lakh, respectively.

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.

Sharekhan has seven per cent market share in terms of number of accounts and is the third largest retail broking firms in India.

The Nifty has risen more than 40% since the start of 2014, largely over optimism tied to Prime Minister Narendra Modi’s government, elected by an overwhelming mandate last year on promises of economic reform.

“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”. “And for the rest we are very focused on executing our industrial plan, as you can see from the results”, Machenil added.

BNP Paribas has been present in India for over 150 years and offers corporate and institutional banking solutions and worldwide financial services.

BNP Paribas has a presence in 75 countries with more than 1,85,000 employees, including 1,45,000 in Europe. There were reports in May that Warburg Pincus and General Atlantic, emerged as the frontrunner to buy a majority stake in the brokerage and financial services firm. The new investors also acquired the stake owned by GA Global Investments, HSBC Private Equity, and the Morakhias. In April 2006, GA Global Investments had entered by acquiring the equity holding of Carlyle in the firm. Existing stakeholders of the brokerage include The Rohatyn Group, Samara Capital, Barings Asia Private Equity and IDFC.