Tatas to resume stock broking

Tata Securities surrendered NSE membership in 2004.

Tata Securities, fully owned by Tata Capital, is reviving its stock broking business in view of the rising investor interest in equities.

Tata Securities is only engaged in the distribution of mutual funds, initial public offers (IPOs) and fixed income securities to institutional investors after the exit of the TD Waterhouse group in late 2004.

As a part of its new plans, Tata Securities has already taken a membership of the National Stock Exchange (NSE), besides activating its Bombay Stock Exchange (BSE) card, according to sources.

They said Tata Securities was slowly building up its equity broking business from scratch. Hiring to build the team for its research, sales and institutional desk is also under way.

US-based discount broking firm TD Waterhouse, which held a 49.9 per cent stake in Tata Securities, exited the joint venture in December 2004.

In the restructuring that followed, Tata Securities decided to concentrate only on distribution of mutual funds and IPO products to investors, even as it surrendered its membership of NSE. The group's BSE card was also lying idle.

Praveen P Kadle, the managing director of Tata Capital, was not available for comments. He did not respond to an email query either.

Tata Capital is fully owned by Tata Sons, the holding company of the Tata Group. "The process is at a preliminary stage. It will take another six months to put everything in place. We have virtually no branch network. We have to build everything from scratch," said a company executive, on condition of anonymity.

Recent months have seen active interest from foreign and Indian players in the Indian equity broking segment. The likes of BNP Paribas (which bought a 33 per cent stake in Geojit Financial Services), Lehman Brothers (which bought the institutional broking business of Brics Securities), Citigroup Venture Capital (which bought equity stakes in Sharekhan and AnandRathi Securities) and Barings Private Equity (which bought stakes in Karvy and JRG Securities) see big potential in this business, given that only 4-5 per cent of the household savings are invested in equity or equity-linked products.

Following the curbs on investments through participatory notes, Indian brokerage houses expect to get a share of this business, which was earlier going to select foreign institutional investors.

Asked if the acquisition of existing companies was a part of its agenda, sources said, Tata Securities preferred an organic growth. Sources also ruled out poaching equity teams from other brokerage houses.