BNP Paribas has become the single largest stakeholder in Geojit Financial Services Ltd.
KOCHI: With the strategic tie-up with French major BNP Paribas, the Kochi-based Geojit is all set to expand its presence at the global level.
The new logo of Geojit BNP Paribas Financial Services Ltd. was unveiled here in the presence of C..J George and Olivier Le Grand.
BNP Paribas has become the single largest stakeholder in Geojit. However, the company would continue to be under the existing management. Three directors would be inducted into the newly constituted board of the company, they told reporters here.
The Kochi-based financial company can tap the investment of four million NRIs largely spread around the Gulf countries, Mr George told The Hindu .
Geojit BNP Paribas is also looking at the expatriate population in West Asia, the U.K., the U.S. and Europe as potential clients. The alliance with Paribas would be a major boost to the Kochi company and enable it to reach out to hitherto untapped sections of potential investors, Mr. George said.
With the significant presence of the global banking major BNP Paribas in countries such as the UAE, Saudi Arabia, Oman, Bahrain, Qatar, several high net worth individual bank customers are expected to add business volumes to Geojit BNP Paribas from these markets.
With the economy in a buoyant mood, foreign institutional investors (FIIs) are expected to make a beeline to Third World markets like China and India. The new synergy developed by the Kochi-based company with the French banking major will help in channelising some transactions through the broking company, Mr. Le Grand said. There are already indications that several Japanese FIIs are seeking fresh inroads into the Indian markets through the channels of the French banking consortium. Several European firms and those in the Far East are also expected to take the FII route to Indian equity markets.
Mr. Le Grand, Federic Amoudru, chief executive and country head of BNP Paribas India, and Rousseau, head of BNP Paribas Securities, Asia, will become members of the director board of the new company. Mr. George will be on the board of BNP Paribas Personal Investor Service worldwide to be based in Paris.
The stake of the original co-founders of Geojit Securities has come down to 31 per cent in the new company. Mr. George said efforts were already on to develop institutional broking business in a big way with Mumbai as the base.
It may be recalled that the Board of Directors of Geojit had issued 5.68 crore shares and 2.28 crore warrants to BNP Paribas. With this final step, the French banking major has become the largest shareholder in Geojit Financial Services Ltd. The name of the company will be changed to `Geojit BNP Paribas Financial Services Ltd.' and the business will continue to be managed by the current team headed by Mr. George, managing director.
With the allotment of 5.68 crore shares, BNPP gets 27.18 per cent stake in the company. The rupee one face value share is now allotted at Rs.26. The board also issued 2.28 crore warrants that could be converted into equity shares at the same price. After conversion, the stake of BNP Paribas in the company will be 34.35 per cent.
According to Mr. George, Geojit will be in a position to serve a large number of Indians who live outside the country by joining the global network of BNP Paribas. Besides, the company will gain knowledge from BNP Paribas' position as the market leader in online brokerage in continental Europe.
The press release said the additional capital will be utilised for expansion of business in West Asia, branch expansion in India and strengthening the financial products distribution division. Geojit BNP Paribas will be able to combine the expanding branch network, technology and management capabilities with the brand image, international experience and product profile of BNP Paribas. According to Fortune magazine, BNP Paribas is the sixth most admired global banking brand. BNP Paribas operates in over 85 countries and has 1,40,000 employees.
According to Mr. Le Grand, head of BNP Paribas Personal Investors, with the strategic cross-continent partnership, it will capitalize on Geojit BNP Paribas' strong experience in brokerage and asset gathering to accelerate development and generate synergies in fast growing markets.
Geojit, a pioneer in its domain, has been in the forefront of latest developments in financial services. The company was the first to introduce Internet trading along with many other firsts in the equity and commodities trading in the country. With two decades of experience in intermediary services, Geojit has a network of over 400 offices rendering high quality execution and related services. Geojit manages Rs.6,000 crore of assets for a customer base of 2,50,000 clients.
The company, with 2,200 employees, is in the business of equities, derivatives, portfolio management services, custody services, distribution of mutual funds, and life insurance, commodity trading and margin trading. For the nine months ended December 2006, Geojit recorded net profit of Rs.19.47 crores on an income of Rs.97.65 crore and declared an interim dividend of forty per cent.
Geojit has offices in Dubai, Abu Dhabi, Sharjah and Muscat through its joint venture Barjeel Geojit Securities LLC based in Dubai. The company along with partners from Saudi Arabia, Oman and UAE is setting up another retail brokerage company in Saudi Arabia after getting brokerage licence from CMA (Capital Market Authority) with a capital of SR 100 million. This joint venture company targets 10 per cent market share in the Saudi domestic market with 15 branches in a medium-term view.