NSE may divest 25% stake via OFS route
The dilution of up to a 25% stake would help the NSE IPO raise around Rs10,000 crore
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Mumbai: The National Stock Exchange of India Ltd (NSE) is looking to divest around a 25% stake through the offer for sale (OFS) route in its planned initial public offering (IPO), three people aware of the development said.
At a dilution of up to a 25% stake, the NSE IPO could raise around Rs10,000 crore, they said. This will make it the largest public listing since Coal India Ltd’s Rs15,200 crore IPO in October 2010.
“The exchange and its IPO merchant banks have asked investors to collectively dilute around 25% stake in the exchange. They have requested all investors to dilute at least 25% of their stakes,” said the first person cited above, requesting anonymity as the talks are private.
The merchant banks and the exchange have set a deadline of 23 November for the investors to decide on the size of the stake they want to tender in the OFS, he added.
On 23 August, NSE named Citigroup Global Markets India Pvt. Ltd, JM Financial Institutional Securities Ltd, Kotak Mahindra Capital Co. Ltd and Morgan Stanley India Co. Pvt. Ltd as global coordinators for its plan to go public. Cyril Amarchand Mangaldas was appointed legal adviser.
Last week, Mint reported that NSE had appointed four additional banks to manage its IPO.
On 20 September, Mint reported that bankers for NSE are asking investors to sell a part of their holding in the bourse’s proposed initial share sale at a price that values the bourse at up to Rs45,000 crore.
The proposed valuation is around two-and-a-half times the price at which the shares last changed hands.
In July, State Bank of India (SBI) sold a 5% stake in NSE to Mauritius-based Veracity Investments Ltd for Rs911 crore, valuing the exchange at Rs18,200 crore. The valuation is being pegged at 30 times NSE’s projected earnings for fiscal 2018, Mint reported.
“Once the decision has been taken by investors on the quantity of shares they will be divesting in the OFS, these shares will be transferred to escrow accounts, the deadline for which has been set around the second week of December,” said the second person mentioned above, also requesting anonymity.
If these deadlines are met, the filing of the share sale prospectus should be possible by the end of December, which is the target the exchange and bankers are looking at, he added.
Not all shareholders may sell stakes in the OFS.
State Bank of India, which has in the past urged NSE’s listing, has decided against participating in the OFS, Mint reported on 20 September.
“We will hold our stake in NSE and take a decision of exiting after seeing the IPO pricing. But as of now, we expect valuations to improve post the listing,” said Arundhati Bhattacharya, chairman of India’s largest lender.
“NSE is expected to be a listed entity soon. We are not in a position to comment on other issues now,” said a spokesperson for NSE in an email response to queries on the IPO process.
Major shareholders in NSE include Life Insurance Corp. of India (10.51%), Goldman Sachs (5%), Tiger Global Management (3%) and Citigroup Strategic Holdings Mauritius (2%). After its stake sale in July, SBI has a 5.19% stake in NSE.
NSE’s rival BSE Ltd, Asia’s oldest exchange, filed its share sale documents in September to sell a 27.43% stake.