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Stock market investors in India are going to enjoy in the next 12 months what has never happened in the history of the country’s capital markets – IPOs of stock exchanges. BSE IPO is likely to hit the markets sooner than the public offering of its younger but bigger counterpart. With institutional investors making a beeline to sell their shares in both the leading stock exchanges and increasing risk appetite in the primary market, the conditions are good for these crucial listings.
Prospectus for BSE IPO next month
Asia’s oldest stock exchange, the Bombay Stock Exchange (BSE) is likely to file paperwork for its upcoming IPO early next month. BSE IPO is likely to raise INR800 crore (INR8 billion) through the offer for sale (OFS) route. In a recent development, existing shareholders showed interest to sell as many as 3 crore (30 million) shares through BSE IPO. Private investors plan to sell nearly 30% of the equity base of Asia’s oldest bourse in the upcoming IPO.
BSE IPO has received in-principle approval from SEBI. In the beginning of the year, the regulator notified amendments to its SECC (Stock Exchanges and Clearing Corporations) regulations regarding listing of stock exchanges. Global investors including Caldwell Securities, Argonaut Private Equity, and George Soros’ Quantum Fund are among the prominent investors in BSE.
NSE IPO makes progress too
While BSE has been keen for a cross listing for long, its competitor National Stock Exchange (NSE) was not so welcoming to the idea. Nevertheless, NSE management has has taken steps towards its listing and has named four investment bankers to manage the upcoming IPO.
In a statement on its website, India’s leading exchange said it appointed Citigroup Global Markets, JM Financial Institutional Securities, Kotak Mahindra Capital Company, and Morgan Stanley India Company as the joint global co-ordinators for the IPO. Cyril Amarchand Mangaldas has been appointed legal advisor.
With these steps, NSE expects the listing process to gain further momentum. NSE will consider appointment of more banks for additional roles as may be felt expedient
The IPO will value the stock exchange at nearly INR18,000 crore (INR180 billion). NSE hopes to file draft prospectus for IPO by January 2017.
SBI and LIC hold slightly above 10% equity stake in NSE while Goldman Sachs (5%), Stock Holding Corporation (5%) and IDBI Bank (5%) are other prominent investors. Tiger Global (3%) and Citigroup Strategic Holdings Mauritius (2%) are among smaller investors but NSE has 22 such shareholders with shareholding exceeding 1%.
The IPOs by these stock exchanges will be great opportunities for investors to participate in India’s capital market growth through direct plays. Currently, buying shares of brokerage houses is a way for investors to place their bets but these options are often muddled by erratic earnings and losses of brokers’ other businesses.