Brokerages try to reach out to NRIs and PIOs

Though data on NRI investments is hazy, preferred asset classes are stocks, mutual funds and property, experts say. According to RBI data, $3.9 bn of NRI money flowed into India in 2006-07 , compared to $2.8 bn the previous year. About 46% of the net investible sum is put in the abovementioned assets classes. The US, UK, UAE and Saudi Arabia are the top countries from which a majority of the NRI inflows are coming into India.

According to the recently-published Merrill Lynch-Capgemini Asia-Pacific Wealth Report, the NRI segment is emerging as a niche segment within the high networth individual (HNI) market globally.

One of the ways to enter foreign markets is to forge partnerships with local financial institutions . In a similar pact, Anil Ambani-promoted Reliance Money recently tied up with Chellarams Plc, a leading South Africa-based industrial house, to offer financial services to retail investors in Nigeria.

With this arrangement, Indians (including PIOs) living in that country will be able to invest in Indian equities, equity options and commodities futures, mutual funds, insurance products and offshore investment instruments. The company has got into similar arrangements in Oman, UAE, Hong Kong and Saudi Arabia. It has plans to expand its operations in over 15 countries spread across Europe, North Africa, the West Asia and South East Asia by next year, company officials said.

According to Reliance Money CEO Sudip Bandyopadhyay, the brokerage is aiming to generate 50% of our revenues from overseas markets by 2012. Geojit Financial Services has also forged similar partnerships with local institutions to facilitate NRIs (living in UAE, Saudi Arabia and Oman) trade in Indian equities.

Not stopping at forging local partnerships, broking firms like Religare Capital have gone ahead buying established foreign companies to widen their operational reach. The Ranbaxy-promoted brokerage firm acquired 98% stake in the London-based Hichens Harrison & Co, that claims to have presence in 10 overseas markets including rare Latam equity hubs like Argentina and Brazil.

“We plan to have an India-desk in all these countries. Initially, we will start with institutional investments, but later on help retail investors as well,” said a Religare spokesman. The brokerage expects its revenues to jump over 40% as a result of its overseas expansion.