NSE has filed draft red herring prospectus (DRHP) with market regulator SEBI for what could be the biggest initial public offering (IPO) in six years.
It will be an offer for sale (OFS) of 111.4 million equity shares, 22.5% of the exchange’s post offer paid-up equity capital.
In 2015,NSE was ranked first among exchanges globally in terms of stock index options and currency options trading volumes , according to the World Federation of Exchanges.BSE, its rival and Asia’s oldest bourse, has already filed a draft prospectus with the markets regulator for a Rs 1,200-crore IPO.
The issue size is pegged at Rs 10,000 crores, which will eclipse ICICI Prudential’s Rs 6,000 crores IPO concluded recently, but will fall short of Coal India’s Rs 14,475 crores IPO launched in October 2010 .The NSE, which was set up in 1992, has been under pressure from some institutional investors to float an IPO to provide them an exit option for quite some time. In May 2016, Reuters reported that some foreign investors had accused the NSE of going slow on its IPO but the exchange rejected those allegations.
The Exchange is expected to get valuation of Rs 50,000-55,000 crores on listing.
Major shareholders are Life Insurance Corporation, with a 12.5% stake, and Gagil FDI, Aranda Investments and SAIF II SE Investments, each holding 5%. A few months earlier, Mauritius-based Veracity Investments had acquired a 5% stake in the bourse from State Bank of India for Rs 911 crore, valuing the exchange at Rs 18,200 crore.
The OFS will give existing shareholders a chance to exit, and most shareholders have opted for a partial exit. The top-selling foreign shareholders are Aranda, SAIF Investments, GAGIL FDI, Norwest Venture Partners, Citigroup Strategic Holdings and GS Strategic Investments. Major domestic shareholders doing so are SBI, SBI Capital, IFCI, Bajaj Holdings and Bank of Baroda. Tiger Global Five Holdings, which has 3% stake, is offering all its shares. Goldman Sachs and Temasek Holdings would get a chance to reap profits after being forced to sit on for over 10 years.
NSE reported consolidated net profit of Rs 588.32 crores on revenue (operations) of Rs 1,033.72 crores for six months ending September 2016, according to the prospectus.
For 2015-16, its revenue from operations stood at Rs 2,359.17 crores compared with Rs 2,291.04 crores in the previous year. Consolidated net profit for 2015-16 was Rs 975.21 crores compared with 993.81 crores the year before.
Listing on Foreign Exchange :
NSE’s board of directors has also given their nod to list the exchange abroad. It had said the draft prospectus would be filed by April.
Lead Managers and Legal Advisors:
NSE has appointed Citigroup Global Markets, JM Financial Institutional Securities, Kotak Mahindra Capital and Morgan Stanley India as joint global coordinators to manage its IPO. Cyril Amarchand Mangaldas will be the legal advisor. HDFC Bank, ICICI Securities, IDFC Bank and IIFL Holdings are the Book running lead managers.
CDSL, promoted by BSE, filed the draft papers , for an initial public offer through which it plans to sell more than 3.5 crore shares.
Currently, MCX is the only listed exchange in the country, but it had come out with an IPO as a standalone commodity exchange much before the merger of Forward Markets Commission (FMC) with SEBI to create a unified capital markets regulator.