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MUMBAI: BNP Paribas, one of the largest global banks headquartered in Paris, is planning to raise its stake in its Indian retail broking joint venture Geojit BNP ParibasBSE -2.20 % by 4% to 37.58%, a person with direct knowledge of the plan said.
The Paris-based bank has applied to the Foreign Investment Promotion Board (FIPB) for approval. The French bank can buy the shares from the market and bring down its cost of acquisition as the rupee had depreciated 11% against the euro since April. The rupee now trades at 77.88 against the euro.
BNP Paribas managing director CJ George declined comment, while BNP Paribas spokesperson said, "We cannot comment on this transaction.'' George along with his Kerala State Industrial Development Corporation own 33% stake in the company and is classified as promoters.
Geojit BNP Paribas has a market value of around 500 crore and at this value BNP Paribas will have to pay 20 crore. Geojot BNP Paribas shares closed at 22 on the BSE. Heads of retail brokerages say the timing is right for BNP Paribas it can buy cheap and valuation of such brokerages have dipped with falling trading volumes.
"The entry of foreign entity into Indian retail broking business signifies that FIIs are very bullish on India's growth story, and it's a matter of time when entity of these foreign brokerages which have wide retail reach will start making money," said head of a retail broking firm.
He cannot be quoted as he is not authorised to speak on rivals. Now, there are multiple players in the retail broking business with leading names such as Kotak Securities, India Infoline, Motilal Oswal, Edelweiss, ICICI Securities and HDFC Securities.
However, only few retail brokerages such as Geojit BNP Paribas have strong presence in India and the Middle East.
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