South Korea’s Mirae Asset Securities on Tuesday announced the acquisition of India’s retail-focused brokerage Sharekhan for 487 billion won (Rs 3,000 crore) from French bank BNP Paribas.
A Reuters report quoting exchange filings stated 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 sale of the retail broking unit by the Paris-headquartered bank will help it focus on core banking activities.
A BNP Paribas spokesperson 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.
The Seoul-based financial services major already offers retail broking services in India through its venture m.Stock, which offers zero-brokerage and free demat account for life for a one-time fee of Rs 999. Industry players said Sharekhan’s branding and Mirae Asset’s technology prowess can help them beef up their broking presence in the fast-growing Indian 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 8th largest player in the industry.
BNP Paribas had acquired 100 per cent equity of 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, which was 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 the calendar year 2023, nearly 25 million demat accounts have been added, lifting the total count to 135 million. During the 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 more than 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 the financial year 2018-19 (FY19) to Rs 27,000 crore in FY23, 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 active clientele of digital or discount brokers within the 18-30 years 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 & Co in a note earlier this month.