 "South Korea's Mirae Asset Securities buys Sharekhan for Rs 3,000 crore")
South Korea’s Mirae Asset Securities announced on Tuesday the acquisition of India’s retail-focused brokerage Sharekhan for 487 billion won (Rs 3,000 crore) from the French bank BNP Paribas.
A Reuters report, citing exchange filings, stated that Mirae Asset would be acquiring a 72.76 per cent stake in Sharekhan for around 288 billion won from BNP Paribas. It will separately acquire a 99.9 per cent stake in Human Value Developers, which owns a 27.24 per cent stake in Sharekhan, for around 199 billion won.
The Paris-headquartered bank's sale of the retail broking unit will help it focus on core banking activities.
A spokesperson for BNP Paribas confirmed the sale to Business Standard but refused to give details.
Meanwhile, Mirae Asset’s foray into the domestic broking space comes amid heightened retail participation in domestic equities, which are trading around record-high levels.
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The Seoul-based financial services major already offers retail broking services in India through its venture m.Stock, which provides zero brokerage and a free dematerialised (demat) account for life for a one-time fee of Rs 999.
Industry players said Sharekhan’s branding and Mirae Asset's technological prowess can help them beef up their broking presence in the fast-growing India market.
At the end of November, Sharekhan’s active client base stood at over 620,000, the 11th highest in the industry, while that of Mirae Asset stood at over 240,000. As a combined entity, they will be the eighth-largest player in the industry.
BNP Paribas had acquired a 100 per cent equity stake in Sharekhan from a clutch of investors in 2015. The deal size was not disclosed, but industry players pegged it around Rs 2,000 crore.
BNP’s acquisition was completed in 2016 after receiving approvals from all regulatory authorities.
Sharekhan, founded in 2000, is one of the first brokerages to offer online trading.
Before acquiring Sharekhan, BNP Paribas had also picked up a 34 per cent stake in Kochi-based Geojit Securities in 2007.
During the first 11 months of calendar 2023, nearly 25 million demat accounts have been added, lifting the total count to 135 million. In calendar year 2022, 28 million accounts were added, a year-on-year growth of 28 per cent.
The retail broking industry’s top line could double over the next five years, estimates consultancy firm Bain & Company.
The industry — which facilitates stock market trading for investors — has seen its revenues double from Rs 14,000 crore in 2018-19 (FY19) to Rs 27,000 crore in 2022-23, an annualised growth rate of 17 per cent.
“Greater financial literacy, frictionless customer onboarding, and proliferating user-friendly digital platforms have led to a substantial jump in the number of young investors, accounting for 70–80 per cent of the active clientele of digital or discount brokers within the 18-30-year age group. Similarly, 70–75 per cent of newly acquired customers for bank brokers are also below the age of 30, albeit with lower activation rates,” said Bain & Company in a note earlier this month.