Global financial services behemoth Merrill Lynch is learnt to be investing $16-20 million in Bluechip Corporate Investment Centre.
MUMBAI: Global financial services behemoth Merrill Lynch is learnt to be investing $16-20 million in Bluechip Corporate Investment Centre, a Mumbai-headquartered financial products distribution house.
Though the amount of stake could not be ascertained, the transaction underscores the growing clout of the retail client base in India.
It’s the first time that the Delaware-headquartered Merrill Lynch is venturing into the retail side of the financial services business.
Till now, in the 38 countries that it operate, it has focused solely on institutional and high net worth clients.
Bluechip also walks away with a first — as the only pureplay distribution house to attract foreign direct investment.
Bluechip is primarily into the distribution of mutual funds and insurance products, with a marginal slice of its estimated Rs 75 crore topline coming from distribution of fixed deposits and initial public offerings.
India Infoline may argue that the $76.7 million it received from Singapore-based investment institution, Orient Global, for a 22.5% stake in its consumer finance subsidiary India Infoline Investment Services is the first deal of this nature.
But it must be kept in mind that the parent company India Infoline’s main source of revenue is equity broking.
Bluechip has till now been a family-controlled enterprise, promoted by three brothers — J Rajagopalan, J Kannan and J Rajaram.
Market sources say that the brothers will use the funds to expand its distribution infrastructure and all-India connectivity.
Starting off with one office in Mumbai’s Fort area in 1989, it has now grown to 175 offices in 50 cities. The Merrill Lynch fund infusion will help it scale to 300 offices in 100 cities in the next one year, said market sources.
J Rajagopalan, managing director of Bluechip, declined to comment.
However, sources added that Merrill Lynch International of Hong Kong, which has made the investment, was suitably impressed with Bluechip’s 3.5 lakh strong retail client base.
While Bluechip has a good hold over the West and the South, it’s expected to build its presence in the North and East using the funds. The company also plans to get into equity broking a year from now.
Merrill Lynch, the world’s largest brokerage, has seen its share value erode 38% this year, following a writedown of $7.9 billion in the third quarter for bad bets on risky subprime mortgages and related securities.
This had led to the sacking of its chairman and chief executive officer Stanley O’Neal. With effect from December 1, 2007, John A Thain, chief executive officer of NYSE Euronext, will take O’Neal’s place at Merrill Lynch.
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