Mumbai: Temasek Holdings Pvt. Ltd, the investment arm of the government of Singapore, picked up a 5% stake in India’s largest bourse National Stock Exchange (NSE) from NYSE Euronext.
While the value of the deal could not be verified by Mint, Reuters news agency said NYSE sold its entire holding in the exchange for at least $150million (Rs669 crore), valuing the exchange at $3 billion.
NYSE Euronext invested in NSE in 2007, for $115 million.
The deal has been struck two months after NSE tied up with the world’s leading derivatives market, the Chicago Mercantile Exchange, or CME, to launch dollar-denominated Nifty derivatives in the US.
A person close to the development said the exit was inevitable as CME and NYSE are competitors.
Besides, under the stock exchange ownership norm, a foreign investor cannot hold more than 5% stake in any exchange and that prompted NYSE to disinvest, said the person, who did not want to be identified.
In March, NSE tied up with CME to list Nifty futures on the US exchange.
NSE currently has around 55 shareholders with Goldman Sachs and Morgan Stanley holding 5% each. Among domestic institutional promoters, Infrastructure Development Finance Co. Ltd holds 8% and Premji Invest 3%.
Temasek declined to comment on the value of the transaction, its second investment in India after putting $200 million into GMR Group’s energy unit, GMR Energy Ltd.
Manish Kejriwal, senior managing director, Temasek, said in a release: “Temasek continues to focus on investments in India and believes in its long-term potential. We see our investment in NSE as a good proxy to India’s economic growth and the development of its capital markets.”
According to a recent report by Venture Intelligence, a research service focused on private equity and mergers and acquisitions, between January 2004 and December, 13% of the total private equity (PE) investments made in the banking and financial services space were in stock exchanges.
In the report, Dhiraj Poddar, director, Standard Chartered Private Equity, said there was a strong investment thesis clearly reflected in the amount of PE capital the segment has attracted. It revolves around the low level of penetration of savings products and equities, as well as the growing risk-management needs of companies.
Muneesh Khanna, managing director, investment banking, Centrum Capital Ltd, said, “There is great value in NSE and from the PE firm’s point of view, they are betting on the financial services play in India.”