Mumbai: The Bombay Stock Exchange (BSE), Asia’s oldest, said its members approved the sale of 5% each to Deutsche Borse AG and Singapore Exchange Ltd, enabling the Indian market to meet its 19 May deadline to sell stock.
BSE’s members passed the sale at a meeting in Mumbai on 12 April, said Rajnikant Patel, chief executive officer of BSE. The board approved plans to sell a further 41% stake to investors including foreign funds and domestic financial institutions at Rs5,200 a share, the exchange said in a statement
BSE operates India’s benchmark 30-share Sensitive Index, which quadrupled in the past four years as the economy expanded at an annual clip of at least 8%. Deutsche Borse, the world’s biggest stock exchange by market value, and Singapore Exchange agreed to invest in the Bombay bourse, valuing the exchange at $854 million (Rs3,672.2 crore).
“The strategic placements are over,” said T.V. Raghunath, executive director of investment banking at Kotak Mahindra Capital Co., which is advising on the sale. “We are now receiving interests for the balance 41%. Upon conclusion, it will be the largest private placement by stake.”
Foreign and domestic investors including banks, high net- worth individuals, mutual funds and private equity groups are keen to invest, Raghunath said by email on 12 April.
BSE’s move to attract global partners comes after the National Stock Exchange of India Ltd (NSE) in January agreed to sell a 20% stake to investors led by NYSE Group Inc. and Goldman Sachs Group Inc. The Indian government lifted a ban on overseas ownership in local bourses in December.
In addition to the sale of new stock to the two overseas exchanges, the meeting also considered a resolution to issue as many as 431,251 new shares at up to Rs5,200 apiece, according to a notice sent to brokers and obtained by Bloomberg News.
The brokers tendered enough stock to meet its requirements to sell 51% stake, said Patel.
The Singapore Exchange in March agreed to pay Rs5,200 apiece for BSE stock, the same price paid by Frankfurt-based Deutsche Borse in February.
The exchange plans to cut its brokers’ stake to 49% from 100% as part of a plan by regulator Securities and Exchange Board of India to separate ownership from trading.
BSE is seeking partners as it raises funds to upgrade its systems and catch up with NSE, its younger rival. NSE, founded in 1992, has double the daily trading value of its 132-year-old counterpart.
The Sensex advanced 47% in 2006, topping a 42% gain the previous year, as the nation’s $854 billion economy expanded at the second-fastest rate among major economies. The index rallied for a fifth year in 2006.