BSE shares list on rival NSE, rise 33%3 min read . Updated: 06 Feb 2017, 04:36 PM IST
BSE shares rose as much 49% than the issue price of Rs806 after listing on NSE
Mumbai: Shares of BSE Ltd, Asia’s oldest stock exchange, saw a stellar listing as they jumped nearly 33% on debut on Friday after its Rs1,234.4-crore initial public offering (IPO) was subscribed more than 51 times last week
The shares of BSE, the country’s first stock exchange to go public, closed at Rs1,070.55 apiece on the National Stock Exchange (NSE)—32.8% higher than the issue price of Rs806 per share—making it the first bumper listing of 2017.
The shares opened at Rs1,085 and hit a high and low of Rs1,200 and Rs1,065.10, respectively.
Separately, the market capitalization of shares listed on BSE hit a record high of Rs114.97 trillion on Thursday.
Existing shareholders of the exchange sold 15.42 million shares through an offer for sale. The issue represented 28.26% of BSE’s pre-share sale capital.
K.R. Choksey, founder and chairman of K.R. Choksey Shares and Securities Ltd and a pre-exisiting shareholder in BSE, was upbeat about the prospects of the exchange.
“There is scope for stock exchange business to grow. Looking at the way primary markets are, more companies are likely to list in the markets," said Choksey, who became a member of the exchange in 1974.
Some analysts are skeptical about whether the listing gains are here to stay.
“At the current price, the valuations look way ahead of the reasonable space, taking into account the fact that (BSE) is not the market leader," said Ravi Sundar Muthukrishnan, co-head of research, ICICI Securities Ltd.
“I believe the price could correct over the next few months," Muthukrishnan added.
The portion reserved for qualified institutional buyers was subscribed 48.64 times, while that for retail investors was subscribed 6.48 times. The portion meant for non-institutional investors saw a subscription of 159.03 times the shares on offer.
The draft prospectus had listed 302 shareholders that were selling their shares in the IPO. Singapore Exchange Ltd (SGX) sold 5.09 million shares, or a 4.7% stake, to make an exit from the bourse.
Edelweiss Financial Services Ltd, Axis Capital Ltd, Jefferies India Pvt. Ltd, Nomura Financial Advisory and Securities (India) Pvt. Ltd and SBI Capital Markets Ltd, were among the bankers that managed the issue.
Individual shareholders, mainly brokers and trading members, held 56.83% in BSE, before the IPO. The rest was 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 Rs160 crore from Dubai Financial Group, the exchange was valued at around Rs4,000 crore.
BSE’s history dates back to 1855, when five stockbrokers would gather under banyan trees in front of the city’s town hall to trade. It was only in 1875 that it became an official organization, known as the Native Share & Stock Brokers Association. Rival NSE was established in 1992.
NSE is also close to going public and filed its prospectus with market regulator Securities and Exchange Board of India (Sebi) in December. Existing shareholders of NSE will dilute a 22.5% stake in the exchange through an offer for sale. The share sale is expected to be India’s second-biggest IPO.
American investor Tiger Global Management is looking to sell its entire 3% stake in the exchange, according to the draft red herring prospectus. Other significant shareholders that will be selling stakes in the IPO include Aranda Investments, SAIF Partners, Norwest Venture Partners, Citigroup Strategic Holdings, IDBI Bank Ltd, Goldman Sachs, State Bank of India Ltd and SBI Capital Markets Ltd.
A total of 27 investors will be selling their shares through the NSE IPO.
Sebi is currently examining allegations that NSE gave preferential and unfair access to some brokers on its algorithmic trading platform. The regulator is also studying a forensic audit report on the issue by Deloitte India.