Mumbai: The Bombay Stock Exchange, Asia’s oldest, on 18 May completed a nearly two-year exercise of corporatising itself by offloading 51% of broker members’ stake to 19 investors including SBI, LIC and Aditya Birla group, besides Deutsche Borse and Singapore Exchange.
The corporatisation or demutualisation process was to have been completed by 19 May as mandated by the Securities and Exchange Board of India under the BSE (Corporatisation and Demutualisation) Scheme, 2005.
Before demutualisation, 790 broker-members held 100% in the 131-year-old exchange.
The 19 investors have picked up 41% stake and the remaining 10% was sold to Deutsche Borse and Singapore Exchange (SGX), who picked up 5% each for Rs189 crore at Rs5,200 a share earlier this year.
The market capitalisation of the BSE now stands at around $1 billion.
Among the 19 new investors are “pedigreed marquee domestic and overseas institutions as well as select domestic corporates and HNIs,” the BSE said in a statement.
When contacted, a BSE spokesperson said that due to a confidentiality clause in the agreements with the investors, the names of the 19 new investors could not be disclosed.
”This is reflective of the strong global interest in the Indian capital markets,“ the BSE said in the statement.
T V Raghunath, executive president, investment banking, Kotak Mahindra Capital Company, which was the exclusive financial advisor to the demutualisation process, said that a total of $500 million was collected through the stake sale.
“Twenty per cent of this money has gone into the company while the balance has been paid to the selling shareholders which means around Rs440-crore and Rs1,600 crore respectively,” Raghunath said.
He also refused to name the investors nor the stakes taken by them in the bourse.
BSE’s managing director and CEO, Rajnikant Patel, said, “the successful completion of the demutualisation scheme represents a watershed event in the history of the BSE.”
“With the new ownership structure in place, the BSE is well-poised to pursue growth opportunities aggressively.”
Present regulations put a 5% cap on investment by any one single entity while there are 26% and 23% caps on FDI and FII investments respectively.
“With this transaction, FDI investments are complete,” Raghunath said, adding that “FII will come into play only after the BSE goes in for its IPO.”
The BSE is keen to develop new business opportunities in a tie-up with the two overseas stock exchanges. Deutsche Borse enjoys global leadership position in derivatives trading in which presently, market sources say that the BSE is losing out to its rival, the National Stock Exchange of India (NSE).