RETAIL BROKERAGE Foreign majors eye Indian cos

Mumbai: Foreign majors such as the Citigroup, Societe Generale (SocGen), BNP Paribas, Standard & Chartered Bank and Australia-based Macquarie Bank are understood to be contemplating picking up equity stakes in Indian retail brokerages as an easy route to enter the market. Attracted by the tremendous potential and phenomenal growth achieved by Indian retail brokerage firms in recent times, a clutch of foreign majors are mulling an entry into the market. Foreign majors such as the Citigroup, Societe Generale (SocGen), BNP Paribas, Standard & Chartered Bank and Australia-based Macquarie Bank are understood to be contemplating picking up equity stakes in Indian retail brokerages as an easy route to enter the market. Increasing appetite A buoyant stockmarket despite the odd hiccup combined with an increasing appetite for equities among investors, tech convenience of online trading and falling brokerage fees have proved to be the major growth drivers of the industry. The potential of the Indian market was higlighted recently when nearly 19 suitors stepped forward to claim a stake in leading retail brokerage Sharekhan, amongst the top three such firms in the country. The Citigroup is understood to have emerged as the frontrunner for picking up the majority stake in Sharekhan, which analysts say could have a valuation of around Rs 650 crore.The winner will be announced on Monday after the Company’s Board meet, said Shripal Morakhia, promoter of the company. “The retail equity brokerage space has been an area of special focus for major players given the huge growth in the business in recent times and its future potential,” said Alok Jain, a leading city broker. The retail brokerage space has witnessed hectic activity in the last one year with global major ABN Amro launching its retail equity brokerage business in the country while its French counterpart, BNP Paribas, acquired a 33 per cent stake in Kerala-based Geojit Securities. Though the Indian brokerage industry has been consolidating steadily over the last 10 years, the share of the top brokers has risen to only around one-fourth of the industry’s total revenues. Inspite of volume growth in business there exists a huge scope for more consolidation, said Mr Jain.Indian playersIn this fragmented market, leading players -ICICI Direct, Kotak Securities, IL&FS, Motilal Oswal, Indiabulls, Sharekhan and 5 Paisa, apart from many small players, compete on the basis of low brokerage fees and better customer services. In the last three years, the market size of the Indian brokerage market has shown great growth with the total trading volume of brokerage companies expanding from $ 1,239-billion in 2004 to $1,500-bn in 2006. This figure is expected to breast the $6,500-billion by 2015. The interesting point, to note here is the sharp jump in derivative volumes as compared to cash volumes which attracts more high networth individuals (HNIs). [From Internet]