The Hindu Business Line : Retail brokerages eye more distribution tie-ups

Brokerages, some of which are known to be looking at IPOs and private placements for raising funds, are increasingly partnering with insurance companies and MFs for vending savings and investment products.

Nilanjan Dey

Kolkata, June 28

Retail broking outfits, many of which have spread out nationally in recent years, are eyeing more distribution tie-ups to boost revenues. A number of them have already started using branch networks extensively with a view to optimise their reach.

Brokerages, some of which are known to be looking at initial public offerings and private placements for raising funds, are increasingly partnering with insurance companies and mutual funds for vending savings and investment products.

The effort, say investment circles, is in line with some of the plans that brokers have lately tried out. These include arrangements with leading banks that have sought to provide their customers an access to the securities market, courtesy a broking platform.

The range of fund houses and insurers with tie-ups with brokerages is getting wider, thanks to specific distribution arrangements, such as the recent deal between Sharekhan and ICICI Prudential Life Insurance Co.

While broking remains the core business, there may well be need for additional streams of revenues, felt Mr Sameer Koticha, Director, ASK group. This need leads broking companies to these arrangements, he added.

Distribution is key

In an increasingly competitive market, the quality of distribution will make a difference, it is pointed out. Distributors will have to offer a wide basket of products by allying with at least the leading players in asset management and insurance. In cases where online distribution is possible, this needs to be supplemented with offline distribution as well.

The idea of leveraging fully gels with some of the key findings of the recent Dun & Bradstreet survey of Indian brokerages. Incidentally, the survey has noted that a section of the players is weighing the possibility of going public, while another section is willing to consider joint venture arrangements with overseas partners.

Personal loans too

Brokers are not tying up for investment/savings products alone. In a few instances, there are distribution arrangements for personal loans as well. India Infoline, for instance, has recently forayed into this area through the acquisition of Moneytree Consultancy. During 2006-07, the company has distributed loans amounting to Rs 170 crore.

The Sharekhan-ICICI Pru deal stems from the insurer’s strategy to partner with select organiaations, ones with strong brands and relationships with customers, Mr Tarun Chugh, Chief – Alternate Channels & Group Sales, is quoted as saying in a press note. Sharekhan is a retail broker, operating in over 200 cities.

Broking outfits have been able to achieve considerably more in their capacity as fund distributors in recent years, says Mr Vikaas Sachdeva, in charge of distribution at ING MF. Business notched up by fund houses on this front is expected to be strong in the coming days, he noted, adding that brokers that have developed close relationships with their clients over the years will be able to provide personalised service.

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