THIRUVANANTHAPURAM, 28 December 2006 — Al-Oula Geojit Brokerage Company, a joint venture of Al-Johar Group and Geojit Financial Services Limited that was among the four companies who received Capital Market Authority approval last week, hopes to corner a 10-percent share of the trading volumes in Saudi Arabia’s capital markets.
Consulting firm Deloitte, which was approached by Al-Johar Group seeking an international partner with proven track record, expertise and technology, picked up the Kochi-based company. After an international search, Deloitte narrowed the choice and Geojit entered into an equity and management contract.
“Geojit along with partners from Saudi Arabia, Oman and UAE hold equity in the brokerage company that would utilize Geojit’s expertise, experience and technology. The joint venture targets a 10-percent market share with 15 branches in the next few years,” said C.J. George, managing director of the Geojit Financial Services Limited.
With a trading volume of $10 billion per day, Saudi capital markets are the biggest in the Middle East. Geojit is India’s largest networked brokerage house with a presence in all major towns in India and in the Gulf. At present, Geojit has 388 branches across the country and a client base of 425,000 customers, 13,000 of whom trade on the commodity exchanges.
“In addition to being a partner, Geojit will manage the operations of the JV which will invest an initial capital of SR100 million in this project,” George said. The local partners will provide the required support. “The cooperation of leading Saudi, Omani, Emirates and Indian business houses will lead to the establishment of a major regional financial powerhouse. Along with the normal broking services, the company will also offer Internet trading and custody services,” George quoted Khalid Al-Johar of the Al-Johar Group as saying.
The Kerala-based company signed operation and partnership contract recently in Riyadh with Jamal and Khalid Al-Johar Development Co (Al-Johar Group) from Saudi Arabia, National Securities Company from Oman, Rasmalah Investment Co from UAE and eight Saudi investors.
“This will be a landmark in the area of financial services in the Kingdom. Geojit’s internal Information technology capabilities and experience of two decades will be used to set up a model brokerage company,” George said. He said Saudi Arabia, with a population of 27 million, has a per capita income of $ 2,900 and 60 percent of the population invests in the financial sector. The country also has an Indian expatriate population of 1.5 million who are now allowed to invest in the country’s stock market.
“This will be the first time an Indian stock broking company is doing business for the local population in a foreign country and we are expected to be the first non-bank brokerage to start stock broking business in Saudi Arabia,” he added. Geojit will be holding 30 percent equity in the JV with an investment of Rs. 360 million and the remaining by partners from Saudi Arabia, Oman and the UAE.
“With the continuing oil boom, there is tremendous amount of capital seeking constructive avenues of investment from Saudi Arabia. With just about a dozen stock broking companies operating out of Saudi soil there are vast opportunities waiting to be tapped,” George said.
