The Hindu Business Line : More brokerages join the equity bandwagon

EQUITY broking services are attracting more players than you thought. With the expansion of business by large brokers and consolidation among the smaller ones, equity broking is undergoing a quiet change.. Companies that have traditionally specialised in debt have started focusing on equity.

A buoyant equity market that has now lasted for two years, substantial volumes witnessed on the stock exchanges and the arrival of a new generation of investors have prompted these debt houses to consider diversification strategies such as equity services.

What seems to be particularly attracting these companies is the need expressed by a section of their clientele. Many customers are being served by established brokerages, including players such as ICICI and Kotak — a trend that has triggered a desire to enter this new arena.

Among the outfits that have recently rolled out plans on this front are RR Financial and SPA Capital, both of which are planning to tap their relationships with existing customers. These companies have been involved in debt placement and syndication, besides offering services like the distribution of mutual funds. Both reckon that the market has enough room for new and serious players.

RR Financial, said Mr Rajat Prasad, MD, plans to commit about Rs 20 crore in setting up the right infrastructure. "We have already made an initial investment to create the technology platform and propose to offer equity broking from roughly 80 locations," he said.

The company expects to scale this up to over 200 centres by mid-2006, Mr Prasad pointed out, adding that catering to retail clients is on the cards. Incidentally, RR has an NSE membership and plans to take a BSE ticket as well.

Mr Sandeep Parwal, Director, SPA Capital, sees equity broking as an extension of the brand created by the company. "We have been investment advisors for fairly long and wish to add equity services to strengthen what we already do. The idea is to cater to the institutional segment first. Retail will happen only when we are fully confident," he observed.

The widespread use of services by regular, committed customers will hold the key to greater revenues for the stock broking community. The brokerages, established or otherwise, hope to cater to a larger market made up of retail clients — the group of investors commonly termed as the `backbone of the market.'

Mr Vivek Gautam, Director & President of Bajaj Capital's merchant banking division, says, "The fact that there has been an influx of new investors is well-known. But what needs to be underscored is the fact that an equity culture is getting firmly rooted in the retail side of the business,"

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