BSE files for IPO, to list on rival NSE
Photo Credit: Reuters

BSE Ltd filed a draft prospectus on Friday for its initial public offering that will allow Singapore Exchange Ltd and US billionaire George Soros’s hedge fund Quantum to exit the operator of Asia’s oldest stock exchange.

Investors in BSE, earlier known as the Bombay Stock Exchange, will sell a total of 29.96 million shares in the IPO, according to the draft red herring prospectus filed with the Securities and Exchange Board of India. BSE will list its shares on larger rival the National Stock Exchange, the prospectus showed.

The exchange is not selling any fresh shares. BSE had previously said it planned to offload up to 30% stake through an IPO and that the offering could include a possible fresh sale of shares.

As many as 262 shareholders of the total 9,855 shareholders have offered to sell their shares. Singapore Exchange—which holds a 4.75% stake—and Quantum’s Mauritius investment arm, Quantum (M) Ltd, will fully exit. Several other foreign investors, domestic institutions and many individuals will sell all or some of their shares.

BSE, founded in 1875, had been considering an IPO for a long time but its plans were delayed due to a lack of clarity on rules for the listing of stock exchanges.

The notable names missing from the list of selling shareholders include Deutsche Boerse AG as well as state-run Life Insurance Corporation and State Bank of India, who all hold a 4.75% stake each in BSE.

BSE had first approached the capital markets regulator SEBI for the listing in January 2013. However, the proposal was not cleared due to lack of clarity on Stock Exchanges and Clearing Corporations (SECC) Regulations 2012. Based on industry feedback, SEBI issued a notification earlier this year on amendments to the SECC norms, paving way for BSE to list itself. SEBI gave its in-principle approval to the BSE for an IPO in March.

The exchange’s shareholders approved the IPO proposal on June 24.

BSE hasn’t specified the amount it plans to raise via the offering but it has been reported to be around Rs 800 crore.

BSE will be the first listed stock exchange in the country. India, however, has one listed commodity bourse, Multi Commodity Exchange of India Ltd, which floated its IPO in 2012. BSE’s cross-town rival, NSE, is also preparing for an IPO and plans to file draft offer documents by January next year. NSE hired four bankers for the IPO last month.

BSE has appointed Edelweiss, Axis Capital, Jefferies and Nomura as lead bankers. Motilal Oswal, SBI Capital Markets, SMC Capitals and Spark Capital are the other bankers.

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