Mumbai: BSE Ltd on Friday filed for its initial public offering (IPO) that will see it list on larger rival NSE of the National Stock Exchange of India Ltd.
Existing shareholders of Asia’s oldest bourse intend to sell 29.96 million shares through the offer for sale route, according to the information in its draft red herring prospectus. The issue represents 27.43% of BSE’s pre-share sale capital.
The issue size is estimated to be ₹ 1,200-1,300 crore, said two people with direct knowledge of the matter. They spoke on condition of anonymity as the pricing is still not public.
The draft document listed 262 shareholders who have agreed to sell their shares. Singapore Exchange Ltd (SGX) will sell 5.09 million shares, or a 4.7% stake, making a complete exit from BSE.
Mint reported on 6 September that SGX will completely exit its nine-year investment in BSE with a 15.4% gain. According to people cited in that story, BSE plans to price its stock at around ₹ 400 a share, which values the bourse at around ₹ 4,365 crore. SGX had entered into an agreement to acquire a stake in the exchange for ₹ 189 crore in 2007.
Other shareholders who have offered to sell their shares include Atticus Mauritius Ltd (4.01 million shares), Mauritius investment arm Quantum (M) Ltd (4.01 million), GKFF Ventures (2.45 million), Acacia Banyan Partners Ltd (2 million), Canada-based investor Thomas Caldwell’s Caldwell India Holdings Inc. (1.66 million), and Bajaj Holdings and Investment Ltd (1.5 million).
“Having both the main stock exchanges of the country listed will create more competition between NSE and BSE in terms of disclosure, governance, fairness, and pricing of products and indices," said Sanjay Sinha, founder of Citrus Advisors, an investment advisory firm.
“Once BSE gets listed, its indices and products too will get more favour and visibility from market participants across the globe. This is a huge positive for a stock exchange," he added.
BSE has hired eight merchant bankers. They include Edelweiss Financial Services Ltd, Axis Capital Ltd, Jefferies India Pvt. Ltd, Nomura Financial Advisory and Securities (India) Pvt. Ltd, and SBI Capital Markets Ltd.
The exchange last month set up an escrow account for shareholders to tender shares for the proposed IPO. The deadline for the submission of shares ended on 22 August.
BSE changed from a member-owned organization to a shareholder-owned company in 2005—a decision that took effect in 2007. SGX and Deutsche Boerse AG acquired around 5% each in the exchange.
Individual shareholders, mainly brokers and trading members, hold 56.83% in BSE. The rest is held by institutional holders such as the Life Insurance Corporation of India, State Bank of India and Bajaj Holdings, besides the foreign bourses.
In 2010, when billionaire financier George Soros bought a 3.9% stake in BSE for about ₹ 160 crore from Dubai Financial Group, the exchange was valued at around ₹ 4,000 crore.
BSE first approached market regulator 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 norms, such as monitoring of shareholding and so-called fit and proper criteria for investors. It restarted the process soon after Sebi changed these norms earlier this year.
In a letter dated 22 January, BSE told Sebi that it was fully compliant with the latter’s regulations and ready for an IPO. On 12 March, the regulator said that it had granted an in-principle approval for an IPO.
BSE’s larger rival NSE announced last month that it had decided to hire four investment bankers including JM Financial Institutional Securities Ltd and Kotak Mahindra Capital Co. Ltd for its proposed share sale. The exchange also said it would file documents in January for an IPO that would give an exit opportunity to its institutional investors.
Currently, the Multi Commodity Exchange of India Ltd is the only listed bourse in the country.
For the fiscal year ended 31 March 2016, BSE reported consolidated revenue of ₹ 658.27 crore compared with ₹ 624.75 crore a year ago.
In 2015-16, its net profit available to shareholders stood at ₹ 122.53 crore, a decline from the ₹ 129.74 crore a year ago, according to information filed in the draft prospectus.
In the three months ended June, the exchange reported consolidated revenue of ₹ 178.30 crore and net profit of ₹ 41.4 crore, as per the prospectus.