Stake sale, seen as part of a strategy to exit non-core businesses, could fetch the bank around Rs900 crore
Mumbai: State Bank of India (SBI) has invited bids from investors to sell its 5% stake in the National Stock Exchange of India Ltd (NSE), according to a request for proposal floated by the lender.
The nation’s largest bank has hired unit SBI Capital Markets Ltd to manage the bidding process for the stake sale. The bank and SBI Capital Markets together hold nearly 15% of NSE, India’s largest stock exchange.
The stake sale could fetch SBI around ₹ 900 crore, according to calculations based on recent transactions of NSE stock.
SBI’s stake sale plan comes at a time when many state-run lenders are selling non-core assets as they have to set aside money to cover bad loans.
“The NSE stake sale by public sector banks and financial institutions is not a distress sale but a strategy by these institutions to exit from non-core businesses, and to shore up their capital requirements," said Prithvi Haldea, founder-chairman, Prime Database.
“All such investors have profited from their investment in NSE, and they do not have to wait for NSE to list for an exit opportunity as they will be able to sell their stake in NSE at a good value privately."
State-controlled lender IFCI Ltd sold a stake in the NSE worth ₹ 59.25 crore at a price of ₹ 3,950 per share last month. State-run IDBI Bank Ltd also sold around 2% in NSE for ₹ 3,900 per share in April.
Interested buyers are required to submit their bids with SBI Capital by 19 May, documents show.
Spokespeople for SBI and SBI Capital could not be immediately reached for a comment.
SBI’s stake sale plan may also be prompted by the delay in the bourse’s plan to go public, providing an exit route to shareholders.
In a 10 December interview, SBI chairman Arundhati Bhattacharya said NSE should go public (bit.ly/1WCDyMe).
“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.
There were similar demands from several private equity investors seeking to sell their shares in NSE.
On 1 December, 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 initial public offerings (IPO).
Rival stock exchange BSE Ltd has already firmed up its plans to go public.
On 30 March, Mint reported that BSE is looking to launch its IPO before the end of this calendar year to raise up to ₹ 800 crore (bit.ly/1R6iCFa).
On 12 March, BSE received an in-principle approval from Sebi for its IPO.
On the other hand, NSE is yet to seek Sebi’s approval.
In February, after facing continued pressure from investors on the topic of the bourse’s listing, the exchange announced that it has formed a listing committee to kick-start the process of going public and to step up engagement with shareholders on its share sale plan.
For NSE, cross-listing or listing on another exchange is a major issue and the exchange has been pushing for self-listing.
On 1 February, Mint reported that NSE had written to the finance ministry raising concerns over the norms for listing of exchanges, which do not allow self-listing. (bit.ly/1R6jmdz).
Sebi has been firm on its stand on not allowing self-listing.
On 4 May, PTI reported that in response to a letter from NSE, Sebi clarified that the “present regulatory framework does not provide for self-listing".
The matter is now likely to be discussed by the listing committee set up by NSE, as also by the exchange’s board to decide on the next course of action, the report said.
However, Sebi was silent on amending guidelines to allow self-listing in future, or on supervision by the regulator in case of NSE getting listed on its rival exchange BSE, it added.