The board of Geojit Financial Services approved a proposal to issue up to 79.6 million shares of Re 1 each to BNP Paribas at Rs 26 per share, aggregating Rs 207 crore, according to a press release issued by Geojit Financial Services.
The preferential allotment would work out to 33.35 per cent of Geojit Financial Services' fully diluted equity after the employees stock ownership plan, the release said.
This will be BNP Paribas' second major investment in the Indian financial sector after it bought a 49.9 per cent stake in Sundaram Mutual Fund for about Rs 100 crore (Rs 1 bilion).
The release said the offering to BNP Paribas would be in the form of equity and warrants convertible into equity. UTI Bank advised Geojit Financial Services on this transaction.
BNP Paribas' investment in Geojit Financial Services was the beginning of the foray of several high-profile names, including Citibank, US-based Prudential and Australia's Maquaire Securities, into Indian retail broking, said analysts.
With two decades of experience in intermediary services, Geojit Financial Services has a network of over 380 offices rendering trading and related services. Geojit Financial Services manages Rs 4,500 crore (Rs 45 billion) of assets and a customer base of 425,000.
The company would use the proceeds for its expansion in the domestic and overseas markets, mainly in the Gulf region, company executives said. Geojit Financial Services already has offices in Dubai, Abu Dhabi, Sharjah and Muscat through its joint venture, Barjeel Geojit.
The company, along with partners from Saudi Arabia, Oman and the UAE, was setting up another brokerage company in Saudi Arabia using Geojit's expertise, experience and technology in this sector, the release said.
Geojit Financial Services has 2,000 employees in its businesses in equities, derivatives, Internet trading, portfolio management services, depository services, mutual funds, life insurance, commodity trading, margin funding and equity research.