India’s largest stock exchange National Stock Exchange (NSE) continues to be the favourite among investors. Hero Honda and Srei Infrastructure Finance have acquired stakes from IFCI and Stock Holding Corporation of India (SHCIL) at Rs 3,500 per share. SHCIL , a depository, has earned Rs 20.02 crore by selling 57,200 shares while financial institution IFCI will get Rs 42 crore for the 1.20 crore shares which it has sold, reports Economic Times.
The deal pegs the value of NSE at around $4 billion as compared to $1 billion valuation of Bombay Stock Exchange. IFCI and SHCIL are selling their stake in NSE as capital market regulator Securities and Exchange Board of India (SEBI) does not allow more than 5 per cent stake. Before the stake sale SHCIL had a 7.11 per cent stake in the NSE, and even after this deal the stake will still be above the requisite 5 per cent.
Life Insurance Corporation, the State Bank of India, Infrastructure Development Finance Corporation and SHCIL have more than 5 per cent stake in the exchange and have been given a deadline of September to pare it down. In July, SBI had appointed SBI Caps for selling its excess shares in the NSE. LIC has already sold some of its stake.
Last year the NSE had sold 20 per cent stake to Goldman Sachs, General Atlantic, NYSE and SAIF Partners (5 per cent each) for $460 million. NYSE Euronext had bought a 5 per cent stake in the NSE for $115 million last year. The deal valued NSE at $2.3 billion and Rs 2,100 per share was the price paid. In the current deal, shares were traded at Rs 3,500 per share.
Some of the investors of BSE are also reported to be in the market to sell their stake, and are expecting a valuation of Rs 4,500 a share. At the height of the market boom Deutsche Borse had paid Rs 5,200 per share to acquire 5 per cent stake in BSE. The exchange had also sold 5 per cent stake to Singapore Exchange (SGX) for $42.7 million.
The report added that there has been a steady decline in valuation of BSE as BSE has been losing market share to the NSE. The NSE accounts for over 60 per cent of the market share, and almost the entire market share in the derivative space while in the cash market.