BNP Paribas To Sell Its Entire Stake In Brokerage Firm Sharekhan

European banking major BNP Paribas is looking to sell its entire holding in Mumbai-based retail equity brokerage firm Sharekhan, sources said. BNP is in talks with a couple of online financial services companies and lenders, who are looking to add retail brokerage to their portfolio. If one has to go by market speculation, Paytm and Bajaj Finserv are in the fray to acquire BNP's stake but the same could not be independently confirmed by BW. BNP and Sharekhan together have more than two million retail clients, sources said.

BNP had picked up a nearly 100 percent stake in Sharekhan sometime in 2015 for an estimated Rs 2200 crore all-cash deal. It was the Paris-headquartered bank's second deal in the brokerage industry in India. Prior to Sharekhan, BNP had picked up a 34 per cent stake in Geojit Financial, which it sold in 2018. Varun Sridhar, current CEO of Paytm Money, was earlier working with BNP when they were buying Sharekhan. In fact, the sources say, he was instrumental in BNP's deal with Sharekhan. Therefore, it is now being speculated that he may be driving Paytm's interest in BNP's stake in Sharekhan, the sources said.

Sharekhan had nearly Rs 1000 crore cash in its books when BNP cut a deal for the brokerage firm. Sources in the know say that apart from the cash lying in Sharekhan's books, BNP has managed to earn a huge return on its investments, mainly in the form of dividends. Rough estimates suggest that Sharekhan earned a net of anywhere between Rs 200 to Rs 300 crore annually since 2015, the majority of which went to BNP as dividends. In addition, its stake sale now is likely to fetch the bank more than double the amount it had invested in 2015, the sources said.

In 2018, ahead of BNP's acquisition of Sharekhan, PE major Carlyle had bought another brokerage Destimoney Financial Services, from New Silk Route for Rs 1600 crore. The same year, Canada-based Fairfax also made an open offer for a 26 per cent stake in IIFL.

BNP declined to comment on BW's email query regarding the deal.

The writer is author of the book: The Market Mafia - Chronicle of India’s High-Tech Stock Market Scandal & The Cabal That Went Scot-Free. Palak has been a journalist in Mumbai for nearly two decades now. He has worked for most premier pink papers including The Economic Times, Business Standard and The Financial Express and The Hindu Business Line. He was drawn to crime reporting at the age of 19 but a few years in the field told him that the fabric of crime had changed and the organised gangs, as Mumbai had witnessed during the eighties, no longer existed. It was business and markets that dominated the scenario. His passion to unravel the intricacies of the ‘white money’ economy led Palak to the world of finance and regulations.

Palak Shah

BW Reporters The writer is author of the book: The Market Mafia - Chronicle of India’s High-Tech Stock Market Scandal & The Cabal That Went Scot-Free. Palak has been a journalist in Mumbai for nearly two decades now. He has worked for most premier pink papers including The Economic Times, Business Standard and The Financial Express and The Hindu Business Line. He was drawn to crime reporting at the age of 19 but a few years in the field told him that the fabric of crime had changed and the organised gangs, as Mumbai had witnessed during the eighties, no longer existed. It was business and markets that dominated the scenario. His passion to unravel the intricacies of the ‘white money’ economy led Palak to the world of finance and regulations.