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NSE valued at $2.7 bn ahead of planned IPO

04 July, 2016

National Stock Exchange of India Ltd (NSE) that set the ball rolling for its initial public offering (IPO) last week, was valued at Rs 18,220 crore ($2.7 billion) in a new transaction where SBI pared its holding in the bourse.

State-controlled lender SBI said on Monday it has sold 5% stake in NSE for Rs 911.25 crore, offloading shares at Rs 4,050 each. This marks a 2.5% upside to the previous transaction related to NSE early this year.

In April, Hong Kong-based private investment firm Soach Global had picked up a small stake in NSE from IFCI Ltd for Rs 59.25 crore. IFCI had sold shares at Rs 3,950 each.

The deal, which marked another tranche of part-exit for IFCI, was also struck at a marginal premium to the valuation at which the state-controlled firm sold shares in NSE late last year. Last September, IFCI sold a 1.5 per cent stake in the NSE for Rs 263.25 crore ($39.7 million then) to an unnamed buyer. It had sold shares at Rs 3,900 each.

Meanwhile, post the latest transaction, SBI holds 5.19% stake in NSE while its subsidiary SBI Capital Markets Ltd holds another 4.33% in the firm. It did not disclose details on the buyer but named an investment entity Veracity Investments Ltd. Earlier a Mint report citing unnamed people had said private equity firm ChrysCapital and Singapore’s sovereign fund GIC are in talks to buy the 5% stake from SBI.

IPO

This deal also comes as a price discovery transaction ahead of the planned IPO. NSE said last week that 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 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 in May that 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 committee will take decisions within a stipulated time line,” it said.

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

The NSE statement didn’t specify 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.

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 one-fifth of the exchange.

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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NSE valued at $2.7 bn ahead of planned IPO

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