BackBSE secures shareholders’ nod to launch IPO through offer for sale
Out of the 9,283 shareholders of BSE, 37.07% participated and voted in favour of an initial public offering through an offer for sale
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Mumbai: BSE Ltd on Wednesday cleared the final hurdle to go public after its shareholders approved a proposal for an initial public offering (IPO).
Out of the 9,283 shareholders of BSE, 37.07% participated and voted in favour of an initial public offering through an offer for sale (OFS), according to results of the electronic voting exercise published on the stock exchange’s website. The voting had ended on 24 June.
According to The Companies Act, 2013, at least 75% of participating shareholders must vote in favour of a special resolution. Those who chose not to participate in the voting will be considered to have abstained.
BSE counts foreign stock exchanges, such as the Deutsche Boerse AG and the Singapore Exchange Ltd, among its shareholders. They hold 5% each. The total foreign holding in BSE is at 31%. The exchange’s domestic shareholders include Life Insurance Corp. of India (LIC) and State Bank of India (SBI), holding 4.84% each.
Individual shareholders, which includes brokers and trading members, hold 56.83% in the exchange. From this category, shareholders representing only 8.89% of shares participated in the e-voting.
BSE had informed shareholders on 28 May that it will sell as much as 30% stake before 31 March 2017 through an OFS with a possible fresh sale of equity tagged on.
During the e-voting process, 36.94% of the BSE’s shareholders agreed to the proposal of shareholders participating in the OFS.
BSE first approached Securities and Exchange Board of India (Sebi) with a listing plan in January 2013. However, the share sale proposal could not be cleared because of lack of clarity on Stock Exchanges and Clearing Corporations (SECC) norms, such as monitoring of shareholding and fit and proper criteria for investors.
Based on industry feedback, Sebi issued a notification on amendments to the SECC Regulations 2012 on 1 January. The amendments were aimed at making it easier for exchanges to list.
This allowed BSE to revive its IPO plans. It secured an in-principle approval on 14 March.
With the shareholder approval in place, BSE can now complete the listing process within this fiscal.
“This result was expected as an IPO is one of the best ways to have liquidity and better return on investments. Without a listing the investment of the institutional investors would have been locked without a beneficial way of exiting," said J.N. Gupta, co-founder and managing director at Stakeholder Empowerment Services (SES), a proxy advisory firm.
While the exchange has been able to get the requisite number of votes to go public, many of the old shareholders are unwilling to tender their shares and say that they would like to hold on to their shares for sentimental value.
Veteran stock broker, Kisan R. Choksey, chairman of Kisan Ratilal Choksey Shares and Securities Pvt. Ltd, says the BSE stock holds sentimental value for him.
“It is sort of a motherly institution for me. There are also sentiments and emotions attached to our holding in BSE. I would not want to sell my shares in BSE at this point," said Choksey.
“Besides, I see a good future for India and its stock market. BSE is doing well under the current leadership," Choksey added.
On 31 May, Mint reported that the BSE is seeking a valuation of ₹ 400 per share, which would value the exchange at ₹ 4,367.05 crore. The exchange now has a market share of less than 10% in the mainstay cash equities business.
Larger rival National Stock Exchange of India Ltd (NSE) is also looking to file share sale documents for an IPO by January and a foreign listing by April.
Ami Shah contributed to this report.
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