BNP Paribas, one of France’s largest banks with a significant presence in Indian financial services, has acquired Sharekhan, a fast-growing brokerage with a sizeable online clientele. The deal marks the close of a transaction that initially saw many high-profile suitors, including marquee private equity players.
Although the financial details of the transaction were not disclosed, people familiar with the matter said the deal size could be around Rs 2,000-2,300 crore.
The deal comes at a time when there is a growing interest by retail shareholders in trading mainly via online accounts and mutual funds. It also signals speedier consolidation in an industry where the top eight brokerages account for almost two-thirds of the trading terminals in India.
“An agreement has been reached with the company’s shareholders for BNP Paribas SA to acquire 100% of Sharekhan,” said a BNP statement on Thursday. “Sharekhan will join BNP Paribas’ personal investors division, which is a key player in retail brokerage and digital banking services with 1.7 million clients in Europe.”
Mumbai-based Sharekhan did not comment.
Initially founded by Shripal Morakhia and Shreyas Morakhia, Sharekhan was one of the first Indian brokerages that saw a high degree of strategic interest in 2007, when equity markets in India were riding a wave. The Sensex had breached the 20,000 mark and foreign investors had put in a record $17.4 billion in 2007.
Prospects of a robust growth potential in the brokerage business in India prompted large PE firms such as Warburg Pincus, Actis, GA Atlantic to initiate steps for acquiring Sharekhan. Average equity trading volumes -- the total value of transactions -- has been growing 15-20% every year and is expected to reach $6,536 billion by the year end.
In 2006, Sharekhan had raised capital by selling part of its equity to HSBC Private Equity and Carlyle. In 2007, IDFC, Citi’s CVC International and Samara Capital together bought 75% in Sharekhan.
“The purchase of Sharekhan is a unique opportunity to further expand our business in India,” said BNP Paribas India country head Joris Dierckx.
With 7% market share in terms of number of accounts, Sharekhan is the third retail brokerage firm in India.