NSE to file for IPO in India, overseas next year

National Stock Exchange of India Ltd (NSE) on Monday set the ball rolling for its initial public offering (IPO) and said it may even list its shares outside the country.

India’s largest stock exchange said it plans to file by January a draft red herring prospectus to list its shares on domestic bourses and file for an overseas listing by April 2017. The decisions were made at a board meeting on 23 June, the NSE said in a statement.

The NSE follows cross-town rival BSE Ltd, operator of Asia’s oldest stock exchange, in stating that it plans to list its shares. The BSE said last month it planned to sell a 30% stake through an IPO that would comprise an offer for sale by existing shareholders and might include a possible fresh sale of shares. The BSE received in-principle regulatory approval for the IPO in March.

The NSE also said that its board has re-constituted the listing committee as an empowered sub-committee of the board to accelerate the listing procedures. “The said committee will take decisions within a stipulated time line,” it said.

The exchange operator didn’t specify the time line or who all are members of this board committee. The NSE’s board is headed by retired senior bureaucrat Ashok Chawla, who took over as the chairman in May. Chawla was previously head of the Competition Commission of India.

The NSE statement didn’t specify also whether it would pursue the options it had suggested earlier to either self-list or be regulated by the Securities and Exchange Board of India. The capital markets regulator doesn’t currently allow stock exchanges to list on their own trading platforms. Cross-listing would mean the bourses would be regulated by their main rivals.

A Press Trust of India report cited a spokesperson for the NSE as saying that the committee will explore both cross-listing and self-listing options.

Under pressure

The NSE, which was set up in 1992, has been under pressure from some institutional investors to float an IPO to provide them an exit option for quite some time. Last month, Reuters reported that some foreign investors had accused the NSE of going slow on its IPO but the exchange rejected those allegations.

Unlike the BSE, the NSE didn’t specify whether the IPO would comprise only a fresh share issue or an offer of sale by existing shareholders. It also hasn’t said how much money it planned to raise via the offering and the valuation it might seek.

The NSE was valued at Rs 17,550 crore ($2.6 billion) last September when IFCI Ltd sold a 1.5% stake in the bourse for Rs 263.25 crore to an unnamed buyer at Rs 3,900 per share. In April, its valuation inched closer to Rs 20,000 crore when IFCI sold a small stake to Hong Kong-based private investment firm Soach Global at Rs 3,950 per share.

The NSE’s single biggest shareholder is state-run Life Insurance Corporation, which holds a 12.51% stake in the bourse. Overall, state-run insurers together own nearly a fifth of the exchange. State Bank of India and unit SBI Capital Markets Ltd hold 10.19% and 4.33%, respectively, while IFCI, IDBI Bank and IDFC Bank are among the other domestic shareholders.

The exchange’s foreign shareholders include investment banking giant Goldman Sachs, Singapore state investment firm Temasek, private equity firm General Atlantic and venture capital firm SAIF Partners, who each hold 5% of the NSE. Hedge fund Tiger Global and VC firm Norwest Venture Partners are among the other investors.

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