Geojit to gain from BNP Paribas deal

KOCHI: The decision of Geojit Financial Services to give 33.35% equity to BNP Paribas has come as a surprise in the stock market circles. The move is aimed at extending the reach of the company by the time the government implements capital account convertibility.

According to sources, Geojit has an ideal partner in BNP Paribas to get access to many countries in one go. BNP Paribas has a presence in 88 countries. The partnership will be useful when the capital account convertibility goes onstream, the company reckons.

Geojit currently has over 4.25 lakh clients and the number is set to grow many fold in five years. They will get a chance to invest in stock markets of different countries with full capital accountability.

Geojit is also expecting to gain from the superior technology platform of BNP Paribas, sources said. Geojit has already been a pioneer in the new technology spheres in the country, being the first to introduce Internet stock trading in the country.

The step has come at a time when Geojit was actively expanding its footprint in the Gulf sector. The company had even gained a foothold in Saudi Arabia through a joint venture and had targeted 10% share in the next few years. The company sources said BNP will also gain from the increased presence of Geojit in Gulf countries particularly Saudi Arabia.

The present management will continue to supervise the day-to-day activities but BNP will have a say in the policy decisions of Geojit hereafter. It is learnt that about one-third of the directors of Geojit will be from BNP Paribas. The 33.35% stake at an investment of Rs 207 crore has made BNP Paribas the largest single shareholder in Geojit with promoter C.J.George’s share now standing at 20%, down from 38%.

Geojit’s decision marks yet another step by a Kerala-based company to align with national or global brands. Earlier this year Peninsular Group with 257 branches had sold its capital market operations to Motilal Oswal Securities Ltd. Recently, there was the controversial takeover of Lord Krishna Bank by Centurion Bank of Punjab, which is awaiting approval of RBI.