No regulation bars an institution from being the promoter of different brokerages or market intermediaries. “This could be a step to avoid complications in the future. BNP Paribas cannot be a party in the core business decision making of Geojit when it owns one of its business competitors, Sharekhan. Geojit would follow all the corporate governance norms like providing business information to its erstwhile partner on a need to know basis,” said a securities lawyer.
The management of Geojit said it would continue to foster a positive relationship with BNP. “South India is the core strength of Geojit, while Sharekhan is strong in the west and north. So, we are not competitors. BNP will continue to be a valued shareholder in our company,” said C J George, managing director of Geojit.
BNP had announced the acquisition of Sharekhan in July 2015. The proposal was initially rejected by the Foreign Investment Promotion Board, which finally approved in October 2016. In the Rs 2,200-crore deal, BNP bought all the equity.
BNP had bought stake in Geojit in 2007 and had also lent its name for Geojit’s branding. Geojit has now decided to drop BNP's name from its branding, the company announced on Wednesday.
The shares of Geojit ended one per cent lower at the bourses. Geojit is among the few publicly listed brokerages and is headquartered in Kochi. Its net profit was Rs 12.4 crore, on revenue of Rs 59.3 crore, for the quarter ended December. The company is valued at Rs 920 crore.