A man (R) watches a large screen displaying India’s benchmark share index on the facade of the Bombay Stock Exchange (BSE) building in Mumbai, India, August 25, 2015. Volatile global markets got some respite from the latest blood-letting on Tuesday as bargain hunters nudged up Asian and European stocks, though China, at the center of the rout, was smashed again. REUTERS/Shailesh Andrade – RTX1PJMI Photo Credit: Reuters

Anchor investors bet $55 mn on BSE ahead of IPO

23 January, 2017

BSE Ltd on Friday raised Rs 373 crore ($55 million) through sale of shares via anchor allotment ahead of its three-day initial public offering (IPO) that begins Monday. Asia’s oldest stock exchange issued a little under 4.63 million shares to 25 institutional investors at Rs 806 apiece, the upper end of the Rs 805-806 price band, a stock exchange filing showed.

Investors that acquired the shares include marquee global names such as Capital World (Rs 70 crore), Goldman Sachs Asset Management (Rs 26 crore), Citigroup Global Markets Mauritius Pvt Ltd (Rs 10 crore), FIL Investment (Mauritius) Ltd (Rs 18 crore), DSP BlackRock Alternative Investment Fund (Rs 15 crore), GP Emerging Markets (Rs 5 crore), Massachusetts Institute of Technology (Rs 5 crore), University of Notre Dame du Lac (Rs 9 crore), Kuwait Investment Authority Fund-224 (Rs 18 crore) and Washington University (Rs 7 crore).

News Corp VCCircle was the first to report that BSE’s anchor book was likely to see participation from Capital Group, FIL Investment (Mauritius) Ltd, Goldman Sachs and the world’s biggest asset management company BlackRock, Inc. 

Anchor investors are institutional investors who accept a one-month lock-in period for a sizeable allocation of shares and support a public offering. Their participation highlights investors’ confidence in an IPO and sets a benchmark for the investor community at large.

Among Indian asset managers, ICICI Prudential MF (Rs 44 crore), HDFC MF and Reliance MF (Rs 20 crore each), SBI MF (Rs 16 crore), Birla Sun Life MF (Rs 15 crore), Sundaram MF, Kotak MF and L&T MF (Rs 10 crore each), and IDFC MF and Principal MF (Rs 5 crore each) picked up shares.

Insurers Bajaj Allianz and Birla Sun Life Insurance (Rs 10 crore each) and Canara HSBC OBC Life (Rs 5 crore) were also among the 25 names that were allotted shares. 

The strong investor interest gains importance as BSE becomes the first stock exchange in India to go public. It is also the first public offering in 2017 and features among the top 10 IPOs in the last six years. Rival National Stock Exchange Ltd is also preparing for a listing and filed its IPO proposal last month. BSE, formerly Bombay Stock Exchange, is seeking a valuation of Rs 4,400 crore ($645 million) through the IPO.

The offer comprises an offer for sale of 15.43 million shares of Rs 2 face value each, according to the BSE’s red herring prospectus filed with the Securities and Exchange Board of India (SEBI). This constitutes 28.26% of its post-issue capital base. The number of shares on offer is a tad higher than previously planned after the exchange operator did a reverse stock split.

BSE had earlier planned to sell 29.95 million shares of Re 1 face value each, according to its draft prospectus filed with the capital markets regulator in September.

About 300 shareholders will sell shares of BSE in the offering. The draft prospectus had listed 262 selling shareholders. The selling shareholders include Singapore Exchange Ltd, US billionaire George Soros’s hedge fund Quantum and a unit of Citigroup Inc. Singapore Exchange will sell its entire 4.67% stake while Quantum will offload its 3.68% holding, according to information made available in the prospectus.

BSE’s biggest shareholder is Deutsche Börse AG with about 4.76% stake, followed by the country’s largest lender State Bank of India (SBI) with 4.75% and Life Insurance Corporation (LIC) of India with 4.68%. Deutsche Börse, LIC and SBI are not selling any shares.

BSE said previously it will list its shares on the rival NSE on or around 3 February.

It has appointed Edelweiss Financial Services Ltd, Axis Capital Ltd, Jefferies India Pvt Ltd and Nomura Financial Advisory and Securities (India) Pvt Ltd as lead bankers. Motilal Oswal Investment Advisors Pvt Ltd, SBI Capital Markets Ltd, SMC Capitals Ltd and Spark Capital Advisory (India) Pvt Ltd are the other bankers.

BSE, founded in 1875, will be India’s second bourse to go public, after Multi Commodity Exchange of India Ltd listed its shares five years ago. 

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Anchor investors bet $55 mn on BSE ahead of IPO

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