Gearing up to launch its much-awaited IPO, Asia’s oldest bourse BSE on Friday filed draft papers with market regulator SEBI for the public issue of shares worth up to Rs 1,500 crore.
Among existing shareholders, Singapore Exchange, as also Mauritius-based arms of American investor George Soros’ Quantum Fund and foreign fund Atticus, will sell their entire shareholdings in the offer for sale of up to 29,955,434 shares of BSE Ltd. to be listed on rival exchange NSE. This works out to close to 30 per cent of the total holding. Besides, Bajaj Holdings and Investment, Caldwell India Holdings and Acacia Banyan Partners will offload part of their holdings in the IPO, as per the draft red herring prospectus (DRHP) filed with the regulator.
Sources said the IPO may give a market value of over Rs 5,000 crore to BSE, the world’s largest exchange in terms of the number of listed companies. The collective market value of all the companies listed on BSE, earlier known as the Bombay Stock Exchange, currently stands near a record high level of over Rs 112 lakh crore.
Shares of nearly 3,000 companies trade on its platform. As many as 262 shareholders, mostly with small stakes including a few individuals with holdings as low as 150 shares, have offered to participate in the sale and these include JM Financial, GKFF Ventures, Nadathur Estates, Isheta Realty, Keynote Capitals, Sharekhan, Citigroup Global, Centrum Broking, Emkay Global and IDBI, as per the DRHP. There are an estimated 9,000 shareholders in BSE, where originally mostly brokers held shares.
However, a host of foreign investors and domestic financial institutions have acquired shares over the years and the IPO will provide some of them an exit opportunity to monetise their assets. Sources said the shares could be offered at a price of as high as Rs 500 each in the offer, giving the IPO a size of up to Rs 1,500 crore. Even at the lower end of the band, the IPO should be worth about Rs 1,200-1,300 crore, they added. BSE shares will be listed on NSE as SEBI rules do not allow self-listing for an exchange.
Rival NSE has also announced its plans to get publicly listed, but BSE has now taken the lead with filing of the DRHP. Besides, NSE has been insisting on self-listing or exemption from regulatory oversight by a rival exchange though Sebi has maintained that the rules permit only cross-listing of bourses. BSE got in-principle approval from Sebi earlier this year for the IPO. The board of directors of the exchange approved the DRHP at its meeting earlier this week on Wednesday.
The exchange had received robust response for the proposed OFS from the shareholders who have offered to tender an estimated three crore shares. The shares that are not sold in the OFS will be locked in for a year from the date of allotment of shares in the IPO. BSE had set up an escrow account wherein the shareholders can tender shares for the OFS.
The issue is being managed by Edelweiss Financial Services, Axis Capital, Jefferies India, Nomura Financial Advisory and Securities (India) Pvt Ltd, Motilal Oswal Investment Advisors, SBI Capital Markets and SMC Capitals. Nishith Desai Associates is the legal advisor to the IPO while Karvy Computershare is the registrar. The exchange had reported a 40 per cent increase in its consolidated net profit at Rs 52.72 crore for the first quarter to June 2016. The exchange may allocate up to 60 per cent of the QIB portion to anchor investors. One-third of the anchor investor category will be reserved for domestic mutual funds.
The Securities and Exchange Board of India (SEBI) notified amendments to the Stock Exchanges and Clearing Corporations regulations on January 1. The new rules are aimed at making it easier for stock exchanges to list their shares through an IPO. Soon after the amendments, the exchange had sought approval for launching the IPO, saying it is in compliance with all the requirements for listing. Presently, Multi Commodity Exchange of India is the only listed bourse in the country.