BSE to sell up to 30% equity shares via IPO

The Bombay Stock Exchange (BSE), Asia's oldest stock exchange, today said it has filed documents with capital market regulator Securities and Exchange Board of India (Sebi) for its upcoming initial public offer (IPO).

Under the IPO, shareholders of the BSE will be selling up to 29.96 million shares, or 27.9 per cent stake (up to 30 per cent of the post-issue equity share capital) of the exchange via the offer for sale (OFS) route at a price ranging from Rs1,200 to Rs1,300 crore, according to the draft prospectus.

The sale of stake, including by Singapore Exchange - which will be selling its entire stake in the exchange – is expected to raise up to Rs1,300 crore ($195 million), which could happen later this year, reports citing unnamed sources said.

The 141-year-old stock exchange has about 9,000 shareholders, including Deutsche Boerse AG, Singapore Exchange Limited, Caldwell India Holdings Inc, Atticus Mauritius Limited and Acacia Banyan Partners Limited, LIC, SBI and Bajaj Holdings.

BSE has already received permission (letter dated 14 March 2016) from the Market Regulation Department of the Securities and Exchange Board of India (Sebi) to list its equity shares, subject to compliance with applicable law.

The decision to file the IPO papers was taken by the BSE at its board meeting held on Wednesday.

BSE in a release on its website said, the exchange is proposing to conduct an offer for sale of equity shares by the existing shareholders of the exchange (offer for sale) through the IPO in order to provide an avenue to the existing shareholders to sell their respective equity shares.

BSE said subject to Sebi (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended (Sebi ICDR Regulations), shareholders can participate in the IPO by selling their equity shares as part of the offer for sale and avoid the lock-in of their equity shares for one year from the date of allotment / transfer of equity shares in the IPO.

Any existing shareholder, can propose for sale, at his/her own discretion, all or part of his/her equity shares in the offer for sale, subject to such equity shares having been held for a continuous period of one year prior to filing of the draft red herring prospectus with Sebi.

The sellers will receive the same sale price as the issue price for IPO, net of expenses and applicable taxes.

Equity shares that are not sold in the offer for sale will be locked-in for a period of one year from the date of allotment / transfer of equity shares in the IPO, unless the investor belongs to an exempted category, ie, except employees currently in the employment of the exchange holding equity shares under an employee stock option or employee stock purchase scheme, venture capital funds (VCFs), Category I alternative investment funds (AIFs) or foreign venture capital investors (FVCIs) duly registered with Sebi.

Founded in 1875, BSE, whose first venue for broker meetings was under a banyan tree in India's financial capital Mumbai, has long been considering an IPO. However, lack of clarity on rules for the listing of stock exchanges had delayed the process.

Of the 107.35 million shares in BSE, trading members hold about 52.3 million shares (or 48.7 per cent) with the rest held by Deutsche Boerse AG, Singapore Exchange and a group of foreign portfolio investors, insurance firms and individuals.

Singapore Exchange plans to sell its entire stake in BSE in the IPO, the prospectus showed.

BSE, formerly known as the Bombay Stock Exchange, boasts the most listings in the world with more than 5,900 listed companies but it has been dwarfed by rival NSE in trading volumes, especially since the introduction of derivatives that have increased liquidity in large caps.

For the quarter to the end of June, BSE reported total income of Rs165 crore ($24.7 million) and net profit of Rs52.7 crore.

Rival NSE said in June it would will file for a domestic initial public offering (IPO) by January, and would also pursue one abroad.

Axis, Edelweiss, Jefferies and Nomura are the joint global coordinators for the IPO, while Motilal Oswal, SBI Capital Markets, SMC Capitals and Spark Capital are among the other bookrunners.