BNP Paribas to buy India's Sharekhan in brokerage push (updated)

Geojit Financial Services

30/07/2015 09:47

* BNP Paribas to buy Sharekhan for undisclosed amount 
    * Marks second major push into Indian brokerage space 
    * India seeing surge in stock buys from retail investors 
 
 (Updates with details, background) 
    By Himank Sharma 
    MUMBAI, July 30 (Reuters) - France's biggest bank, BNP 
Paribas SA  BNPP.PA , has agreed to buy Indian brokerage 
Sharekhan for an undisclosed sum as it looks to beef up retail 
broking operations in India, taking advantage of a surge in 
retail investments into stocks.     
    A rally in share markets that sent indexes to record highs 
in March is attracting hordes of individual investors, improving 
the outlook for retail brokers after years of weak profits. 
    Analysts believe there is large potential for growth in the 
brokerage sector, since fewer than 1.5 percent of households put 
money directly into shares, compared with around 10 percent in 
China and 20 percent in the United States.  ID:nL4N0ZW49Z  
    The deal marks BNP's second big play at retail broking in 
India. In 2007 the company bought a 34 percent stake in a 
domestic brokerage, renamed it BNP Geojit Paribas Financial 
Services  GEOJ.NS  and it now has about 750,000 retail clients. 
    BNP, whose financial offerings in India include corporate 
and retail banking, investment banking and wealth management, 
said the purchase of Sharekhan will allow it to further expand 
into brokerages as well as asset management in India. 
    "Sharekhan will serve as a platform for the group's strategy 
in India to offer a comprehensive range of products," Joris 
Dierckx, country head of BNP Paribas, said in a statement. 
    Although India had seen a surge in retail interest in stocks 
in the last decade, a crash after the global financial crisis of 
2008 drove individual investors away from equities for years, 
returning to a traditional preference for property and gold. 
    Analysts believe that reluctance is now starting to crack.  
    India's broader NSE index  .NSEI  has surged around 42 
percent 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. 
    Domestic net inflows into equity mutual funds in June were 
the second-highest ever, second only to January 2008 before the 
financial crisis took hold, data from the Association of Mutual 
Funds in India shows. 
    Mumbai-based Sharekhan began operations in 2000, is one of 
India's largest retail brokers and has about 1.2 million 
clients.  
 
 (Editing by Rafael Nam and Clarence Fernandez) 
 ((Himank.Sharma@thomsonreuters.com; http://twitter.com/@wolvhim; 
 +91 22 6180 7207; Reuters Messaging: 
himank.sharma.thomsonreuters.com@reuters.net)) 
 
Keywords: SHAREKHAN M&A/BNP PARIBAS