BSE IPO paperwork coming in July

BSE IPO paperwork coming in July

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BSE IPOThe IPO application of Bombay Stock Exchange (BSE) may be filed with market regulator SEBI in the current financial year. BSE IPO will mobilise INR8 billion (INR800 crore) in what will be the listing of Asia’s oldest stock exchange. Although nothing is for sure as of now, sources say paperwork may be coming as soon as July. Edelweiss Financial Services has been appointed as the lead merchant banker and AZB & Partners and Nishith Desai Associates are named legal advisors for BSE IPO.

Read Also: India’s biggest stock exchange NSE hints at listing

A committee of BSE senior management, its board members and shareholders have been overseeing the progress in this regard. Last week, the board discussed BSE IPO in a meeting which was addressed by SEBI Chairman U K Sinha. For FY 2015/16, the exchange’s net profit slumped 38% to INR96.74 crore even as the total income rose to INR616.19 crore from INR583.71 crore.

Regulatory hurdles stopping BSE IPO

It is no secret that the Indian government is under pressure to speed up the development of regulatory framework in this regard. Last year, finance minister Arun Jaitley had to fend questions about stock exchange listings from multiple quarters on his US trip. Certain influential investors including Caldwell Securities, Argonaut Private Equity, and George Soros’ Quantum Fund picked up stakes in BSE between 2007 and 2010, hoping to cash through a listing.

While BSE has been open to the idea of listing itself, the proposal has met with resistance in regulatory circles. Earlier, a high-level committee set up in the chairmanship of former Reserve Bank of India (RBI) chief Bimal Jalan recommended against such listing in 2010 citing potential conflicts of interest.

On the other hand, listing may also usher in more conflict of interests for the stock exchange, since monitoring its own listing related compliances or that of a related/competing MII (market infrastructure institutions) will be an issue.

– Bimal Jalan Committee in its report to SEBI

Nevertheless, these challenges seem to have been resolved as market regulator 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. Public listing of BSE will make it second stock exchange to be publicly quoted in India after Multi Commodity Exchange (MCX).

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I am interested in BSE ipo only if the exchange can commit to sharing its profits like a utility. Otherwise, why invest in a 140 year old tortoise (pun intended)? NSE is more nimble and with the advent of dark pools and other off-the-hand trading mechanisms, it is only a matter of time before BSE loses whatever ‘edge’ it has left. I would be looking for a dividend yield number from these guys.

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