Merrill to enter retail brokerage business in India

MERRILLLynch is planning to add retail brokerage to its business portfolio in India. The development comes close on the heels of reports about Merrill’s possible entry in the mortgage business. The $35-billion financial powerhouse has roped in ex-Citi Financial honcho and distribution head, Manoj Vishwanathan, to spearhead its foray into retail finance and brokerage in India. When contacted by ET, a company spokesperson denied any such development, and declined comment. Sources close to Merrill, however, maintain that the company is in talks with India Infoline for some kind of “arrangement” in the retail brokerage space. The contours of the talks, however, could not be verified. It already owns 14.1% stake in India Infoline. This will be the first big step for Merrill after the de-merger. The retail brokerage space in India is witnessing the entry of a number of global financial institutions, of late. While globally, Merrill is one of the biggest players in retail brokerage, it did not have a retail brokerage presence in India till now and experts reckon that it makes perfect sense for Merrill to leverage their global expertise in India as well. Recently, French banking major BNP Paribas picked up 33.35% stake in southbased brokerage firm, Geojit India. Similarly, E-Trade Financial, global online brokerage major, acquired controlling stake in IL&FS Investmart. In 2005, Merrill Lynch purchased The Advest Group Inc from French Insurance giant AXA to further strengthen its retail brokerage play in Europe. According to industry experts, with only 3% of India’s retail investors investing in the markets, retail brokerage is a huge opportunity. The thriving market and booming Indian middle class makes a strong case for the business segment, which will compliment Merrill’s existing distribution set-up. With 2% commission on brokerage of mutual funds and 0.25% commission on other brokerage transactions, retail brokerage is very attractive for most financial institutions. The other brokerage players in India include the likes of ICICI Brokerage Service (IBSL), Bajaj Capital, India Bulls, Kotak, LM Financial, Enam, Karvy, IL&FS (E-Trade), Geojit andIndia Infoline. Merrill Lynch is reportedly looking to invest Rs 100 crore in the first phase of the its mortgage business which will commence operations in the next six months.

Courtesy: EconomicTimes
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