Mumbai: BSE Ltd, Asia’s oldest stock exchange, is looking to launch its initial public offering (IPO) before the end of this calendar year to raise up to 800 crore, according to two people aware of the development.

The exchange and the intermediaries it has hired are working on regulatory aspects of the IPO, and the draft share-sale prospectus is expected to be filed before the end of the April-June quarter, said one of the two persons, both of whom requested anonymity.

The size of the IPO is likely to be 700-800 crore, said the second person.

BSE is looking at September or October to launch the public offer, said the first person.

“The exchange business is a very well-regulated space and therefore BSE has most of the regulation-related things in place, which will make work quicker," he added.

Work on the IPO has been under way since January, when the BSE invited three or four merchant banks to initiate work on the share sale.

“BSE hopes to complete the formalities within 9 to 12 months. BSE has already appointed merchant bankers and lawyers for the purpose of preparing of documents including DRHP (draft red herring prospectus). Initial meetings have already been conducted amongst different participants for document preparation," said a BSE spokesperson in response to an email from Mint seeking comment.

In 2012, BSE hired 14 banks to manage an IPO; they included Bank of America Merrill Lynch, JPMorgan Chase and Co., Barclays Plc., UBS AG, Kotak Mahindra Capital Co. Ltd, ICICI Securities, Edelweiss Financial Services Ltd, Axis Capital Ltd and IIFL Holdings Ltd.

According to a 6 December PTI report, the exchange is going ahead with broadly the same set of bankers.

BSE restarted its IPO process soon after the Securities and Exchange Board of India (Sebi) notified amendments to the Stock Exchanges and Clearing Corporations regulations on 1 January. The amendments were aimed at making it easier for exchanges to list.

In a letter dated 22 January, BSE told Sebi that it was fully compliant with Sebi regulations and ready for an IPO. On 12 March, Sebi said that it had granted in-principle nod to BSE for an IPO, which would give its investors an opportunity to exit.

“We had decided in January to allow stock exchanges to list. We have granted an in-principle approval to BSE to list," said Sebi chairman U.K. Sinha.

The exchange is looking at a valuation of close to 6,000 crore for the public share sale, said the second person quoted.

BSE counts foreign stock exchanges such as Deutsche Boerse AG and Singapore Exchange Ltd among its shareholders. Other investors include Life Insurance Corporation of India, State Bank of India and Bajaj Holdings and Investment Ltd. Foreign investors such as US billionaire George Soros’s hedge fund Quantum’s Mauritius investment arm Quantum (M) Ltd, Canada-based investor Thomas Caldwell’s Caldwell India Holdings Inc. and US fund Argonaut Private Equity are also investors in the exchange.

In 2010, when 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.

For the fiscal year ended 31 March 2015, BSE reported revenue of 624.75 crore, up 18% from the 529.82 crore it earned in the previous year. In 2014-15, its profit stood at 155.53 crore, up from 135.19 crore in the previous year.

Although Sebi allowed exchanges that are more than three years old to sell shares in June 2012, many clauses such as the “fit and proper" criteria for investors and norms related to limits on individual shareholding made it unviable for bourses to list.

Currently, Multi Commodity Exchange of India Ltd is the only listed exchange in the country.

BSE’s rival, the National Stock Exchange, said in February that it had set up a listing committee to kick-start the process of going public and to step up engagement with shareholders on its share sale plan.

The exchange business is expected to grow strongly as the economy expands and market capitalization of listed companies increases, said Deven Choksey, group managing director and CEO of KR Choksey Shares and Securities Pvt. Ltd.

“Generally it is understood that listed entities are better governed. Also, for foreign investors who are now allowed to own up to 15% in exchanges, a listed entity provides an easier avenue for entry and exit," he said.

swaraj.d@livemint.com

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