Stock broking firm Geojit Financial Services has exited from commodity broking business. Geojit has received a compensation of Rs 40 crore from French banking major BNP Paribas, who has a 27% stake in the firm. Geojit has surrendered its license to trade at MCX, NMCE and NCDEX as well as its Associate Membership to trade at the Singapore Commodity Exchange. The Reserve Bank of India does not allow banks to be involved in commodities trading, and BNP Paribas is a bank in India.
BNP Paribas has made an open offer for additional 20% stake in Geojit Financial and duration of the offer is from December 22, 2008 to January 10, 2009. BNP Paribas acquired the 34.35%, including the stake through convertible warrants, in Geojit in March 2007 for Rs 26 per share, aggregating Rs 207 crore. The firm was waiting for RBI approval for the open offer since then.
After its exit, a new firm has been floated by the promoter CJ George and Rakesh Jhunjhunwala, Geojit Comtrade Ltd, to trade in commodity futures. This company has obtained licenses from MCX, NMCE and NCDEX and has also started trading. As per a report, 236 out of the 260 odd employees in commodities arm resigned Geojit Financial to join Geojit Comtrade.