Investors oppose NSE’s rejig plans

 A group of 9 investors, including Tiger Global and SAIF Partners, have opposed National Stock Exchange's business restructuring plan saying the move would delay the bourse's listing and result in loss in shareholders' value.

These investors - who together hold nearly 20 per cent stake - have also asked the exchange to move an in-principle application before Sebi for listing itself.

Under the proposed rejig, NSE plans to create a separate entity for non-regulated business and the move comes on the heels of markets regulator Sebi approving new listing norms for stock exchanges.

In a letter written to NSE chairman S B Mathur, the investors have expressed "multiple concerns on this such as further delay in Listing of the Company, potential tax liabilities and loss in shareholder value due to restructuring."

Copies of the letter have also been sent to NSE CEO Chitra Ramakrishna, its board of directors and shareholders.

Apart from Tiger Global and SAIF Partners, other investors who have voiced their opposition are Norwest Venture Partners, Aranda Investments, Beacon India Private Equity Fund, DVI Fund, GTI Capital Epsilon, NewQuest Asia Investment and WCP Holdings. They have 19.62 per cent stake in NSE.

The restructuring plan is aimed at transferring ownership of its unregulated businesses like CAMS, Dotex, IISL and others to a new group company.

These businesses are currently directly held by the exchange business and therefore regulated and monitored by Sebi. Under the proposed restructuring these businesses would become subsidiaries of a new holding company, which would also own the exchange business (as a separate subsidiary).

A source close to the investors claimed that the purpose of the restructuring is to prevent Sebi from monitoring the unregulated businesses of the NSE.

Regarding the restructuring plan, NSE had held a meeting with shareholder representatives on November 23 last year.

When contacted a NSE spokesperson said: "After our engagements with shareholders and subsequent meetings of shareholders' committee and board of directors, restructuring proposal was submitted to the market regulator. Discussions with various stakeholders, including shareholders of the exchange are part of regular processes."

"Likewise, several things often come up and are discussed at different levels. As a part of a well established process, the said matter will also be taken up in the next shareholders' committee meeting," he said.

Meanwhile, we have already said that the NSE board and the management are all for listing, he added.

NSE does not have enough support to pass a shareholder's resolution to effectuate the restructuring and therefore we would request the management not to proceed with this including going to Sebi for approval on restructuring, noted the letter by investors.

The NSE should simultaneously undertake all processes to prepare for listing, including appointment of investment bankers, according to the letter.

Further, the investors have said NSE should move forward with a Listing under the current regulations, which do not allow for self-listing of exchanges.

"We would therefore not want the Listing of the company to be delayed on account of seeking a self-listing exemption from Sebi," the letter noted.

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