BNP Paribas, the French banking giant has bought 34.35% in Geojit Financial Services for about Rs. 207 crores ($47 mn). The deal at Rs 26 per share is a combination of equity shares and warrants that could be converted into shares. The bank will also make an open offer to the shareholders of Geojit for another 20% in the company.
With its entry into the retail broking space, BNP has completed another leg of its financial services business in India. BNP already has presence in the life insurance sector through SBI Life Insurance and in the asset management business through Sundaram BNP Paribas Mutual Fund. Riding on Geojit's experience in Indian stock market, BNP is now considering entry into institutional broking business.
In October, Geojit's board had approved issuance of up to 79.6 mn shares (of Re. 1 face value) to BNP Paribas. The financial services firm has now issued 56.8 mn shares to BNP Paribas at Rs. 26 per share. It has also issued 22.8 mn warrants to the bank, which would be converted to as many shares at the same price in 18 months.
The post-deal open offer, expected in a few days, could increase BNP Paribas's stake in Geojit to over 50%. The company's name will be changed to 'Geojit BNP Paribas Financial Services' and three members nominated by the French bank will join Geojit's board. The current management will continue to be in charge of the company.
Read The Times of India article.
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