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BNP Paribas to buy stake in Indian brokerage Geojit
French bank BNP Paribas is paying Rs2.07 billion ($46 million) for a one-third stake in Indian brokerage Geojit Financial Services to expand in the country's fast-growing market.
- Reuters
- Published: 00:00 October 24, 2006
Mumbai: French bank BNP Paribas is paying Rs2.07 billion ($46 million) for a one-third stake in Indian brokerage Geojit Financial Services to expand in the country's fast-growing market.
Shares in Geojit jumped 9.8 per cent their daily limit to Rs27.40 as investors anticipated an open offer from BNP to buy another 20 per cent from minority shareholders to comply with regulations. BNP is paying Rs26 a share.
The deal marks BNP's re-entry to Indian stock broking after an unsuccessful foray that ended in 2001, and is its second major Indian investment in about a year after it bought a 49.9 per cent stake in mutual fund firm Sundaram Asset Management last October.
"The board of directors of Geojit Financial has approved a proposal to issue up to 79.6 million shares to BNP Paribas," Geojit said in a statement.
The new shares would be issued at 26 rupees each, including warrants, a 4.2 per cent premium to its close on Saturday.
Earlier this month, BNP Paribas invested about 50 million euros ($63 million) in its Indian operations, taking its total investments in India to about $221 million. The French group also has a life insurance joint venture with the country's biggest lender, State Bank of India
French rival Societe Generale and others such as Goldman Sachs, Lehman Brothers and Credit Suisse are among the firms looking to tap into the Indian market, where less than 5 per cent of individual savings are invested in equities and the potential for growth is high.
Global firms looking for a jump start would buy into existing firms instead of starting from scratch, said a banker.
Turnover in equities in March 2006 rose 43 per cent from a year earlier to Rs23.9 trillion, and average daily turnover in derivatives rose 90 per cent to Rs192.2 billion, data from the securities regulator showed.
The BNP deal would provide Geojit with capital to expand its operations in India and look for businesses from overseas clients of BNP, a senior official at Geojit said.
The southern state of Kerala, which has a communist government, has a 13.1 per cent stake in the company.
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