Home / Companies / ChrysCapital, GIC may buy SBI’s 5% stake in NSE

Mumbai: Local private equity fund ChrysCapital Investment Advisors India Pvt. Ltd and Singapore’s sovereign wealth fund GIC Pte. Ltd may together buy a 5% stake in National Stock Exchange of India Ltd (NSE) valued at 900 crore, three people aware of the development said.

The stake was put on the block last month by State Bank of India (SBI), the country’s largest lender, which invited bids from potential investors.

“ChrysCapital and GIC have together bid for the entire 5% stake put on sale by SBI. The deal is expected to be closed shortly," said one of the three people cited above. All three spoke on condition of anonymity.

ChrysCapital and GIC are seeking to buy SBI’s stake at a price of around 4,000-4,050 per share, the first person said.

On 18 May, Mint reported that SBI had invited bids from investors to sell its 5% stake, or 2.25 million shares, in NSE. Potential buyers were required to submit their bids to the lender’s investment banking arm SBI Capital Markets by 19 May.

Prominent shareholders of NSE include Life Insurance Corporation of India, SBI, Goldman Sachs Group Inc., Tiger Global Holdings and Citigroup Strategic Holdings Mauritius.

Emails sent to ChrysCapital and GIC on Monday seeking comment for this story did not elicit a response. Emails sent to SBI and SBI Capital Markets also went unanswered.

SBI’s proposed sale of its stake in NSE comes at a time when many state-run lenders, burdened by bad loans and the need to set aside money to cover the risk of default, are selling non-core assets.

State-controlled lender IFCI Ltd sold a stake in NSE worth 59.25 crore at a price of 3,950 per share in April. State-run IDBI Bank Ltd also sold around 2% in NSE for 3,900 per share in April.

The proposed purchase of SBI’s stake in the stock exchange by ChrysCapital and GIC comes at a time when the stock exchange and its shareholders, including domestic and foreign investors, are locked in a protracted tussle. Investors have been seeking an exit through an initial public offering (IPO) by NSE.

From a timing perspective, the proposed investment makes good sense, said a second person.

“NSE shares have changed hands in the private market at around 3,900-4,000, which values the exchange at about 17,500 crore. However, there is a view that the fair value of the shares is almost double of this," the person said. “So if an IPO happens, say in the next year, leading to a proper price discovery that values the shares at up to double the current price, then that would be a big jump in the value of their holding in a short period of time."

SBI’s stake sale may also be prompted by a delay in the bourse’s IPO plan. The delay has proved to be a deterrent to shareholders seeking an exit.

In a December interview, SBI chairman Arundhati Bhattacharya said NSE should go public.

“We would like to exit some part of our stake in the exchange, but we would like to do it in a way where there is proper price discovery. Hence, we are keen that the exchange should list," Bhattacharya said.

Similar demands have been made by other existing investors in NSE who are keen to see it go public.

On 1 December 2015, the Securities and Exchange Board of India (Sebi) amended the existing stock exchanges and clearing corporations regulations to make it easier for stock exchanges opting for IPOs. Rival stock exchange BSE Ltd has already firmed up plans to go public.

In March, Mint reported that BSE is looking to launch its IPO before the end of this calendar year to raise as much as 800 crore. The exchange has already received in-principle approval from Sebi for its IPO.

ChrysCapital, founded in 1999, is a home-grown private equity firm that can take credit for turning global private equity investors’ attention to India. It has more than $2.2 billion in assets under management, and is looking to raise around $600-700 million in its latest outing, its seventh fund.

It has invested across 75 plus companies and its notable exits include Yes Bank Ltd, Mphasis Ltd, Axis Bank Ltd, Intas Pharmaceuticals Ltd, Mankind Pharma Ltd, Suzlon Ltd and HCL Technologies Ltd.

Singapore’s GIC, which manages assets worth $100 billion globally, is a prolific investor in India. The fund invests across sectors such as financial services, pharma, healthcare and energy.

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