BSE will file papers for listing in September; NSE has decided to hire Citigroup Global, JM Financial and others for its initial public offering
Mumbai: BSE Ltd’s much-anticipated listing would involve stockholders selling around 30% of their shares through an offer for sale (OFS), according to two people directly familiar with developments.
Meanwhile, larger rival National Stock Exchange of India Ltd (NSE) on Tuesday said that it has decided to hire four investment bankers and a legal adviser for its proposed share sale. The decision was taken at a board meeting on Monday.
“Around 3 crore (30 million) shares have been tendered by existing shareholders to participate in the OFS," said one of the two people cited above on condition of anonymity.
“Shares tendered by existing shareholders are close to 30% which involves both the institutional investors and brokers," said the second person, also requesting anonymity.
“Considering that about 30% of shareholders have agreed to tender their shares, the exchange will not go for a fresh equity issue," said the first person.
BSE has 109.1 million shares as part of its issued capital. At a proposed price of ₹ 400 per share, the exchange would be valued at around ₹ 4,367.05 crore.
Capital markets regulator Securities and Exchange Board of India (Sebi) had notified amendments to the Stock Exchange and Clearing Corporations Regulations (SECC) on 1 January, paving the way for the listing of stock exchanges. BSE had received an in-principle approval from Sebi for an initial public offering (IPO) on 14 March.
BSE’s annual general meeting on 24 June had sought shareholder approval for the listing through the OFS route.
The exchange last month had set up an escrow account for shareholders to tender shares for the proposed IPO. The deadline for the submission of shares ended on Monday.
A broker, who is a large shareholder of BSE, said that he had tendered around 20% of his holding in BSE for the OFS, adding that he was aware that many other brokers had offered at least 20% of their holdings. The broker declined to be named.
Mint had reported on 1 July that a number of BSE’s oldest shareholders were reluctant to pare their holdings.
BSE is looking to file a draft prospectus with Sebi in the first week of September.
It counts foreign stock exchanges such as Deutsche Boerse AG and Singapore Exchange Ltd among its shareholders. They hold 5% stake each. Its domestic shareholders include Life Insurance Corp. of India (LIC), State Bank of India (SBI) and Bajaj Holdings and Investment Ltd.
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.
While BSE will file papers for listing next month, its younger rival NSE also made progress towards a listing on Tuesday.
“The exchange is committed to list its shares at the earliest possible time frame," NSE said in a press statement.
The NSE board on 22 August decided to hire Citigroup Global Markets India Pvt. Ltd, JM Financial Institutional Securities Ltd, Kotak Mahindra Capital Co. Ltd and Morgan Stanley India Co. Pvt. Ltd as joint global coordinators. It named Cyril Amarchand Mangaldas as its legal adviser, the press statement added.
NSE on 27 June had announced that the exchange would file documents in January for an IPO that would give an exit opportunity to its institutional investors.
The exchange, which is valued at ₹ 17,500-18,000 crore (according to recent trades), will also seek an overseas listing by April.
The development comes after sustained pressure from its largest shareholders led by SBI to do an IPO. SBI holds a 10.19% stake in NSE. LIC owns 10.51%, Goldman Sachs holds 5%, Tiger Global 3% and Citigroup Strategic Holdings Mauritius 2%.
NSE shareholders are hopeful of a listing by March next year.
“The shareholders are delighted by the announcement and the choice of merchant bankers. The public announcement is a statement that everything is on track and the NSE management is clear on listing. We are hoping that NSE would go public by March 2017 and provide an exit opportunity to shareholders," said Sohil Chand, managing director at Norwest Venture Partners, a shareholder in NSE.
“The reconstituted NSE board and the recently appointed chairman have been proactive in addressing the concerns of shareholders," said Chand.