BSE begins road shows for IPO

Executives touring financial centres abroad to tap investors; hope for early Sebi nod

BSE, oldest bourse in Asia, has started road shows to attract investors to the country's first stock exchange listing.

According to sources, the exchange's top management, with bankers, is making presentations to investors in financial centres such as New York, London and Dubai.

The bourse had filed its offer document in September and is hoping for a final nod from the Securities and Exchange Board of India (Sebi) within a week, said a senior exchange official, on condition of anonymity. The official said all queries from the regulator had been addressed. For the record, BSE declined to comment.

Sources said Sebi had queries on the clearing corporation and the change in face value of shares. Earlier this week, BSE filed a corrigendum to the offer document on the latter, for a change in its face value from Rs 1 a share earlier to Rs 2.

BSE is positioning itself as a play on India's increase in domestic savings and equity culture. The exchange is also said to be pitching itself as the world's fastest bourse.

The exchange has seen reasonable growth in listing fees over the years. It is also a market leader in the small and medium enteprrises segment, mobile trading and mutual fund platform. BSE has three revenue streams-listing fees, transaction fees and sale of data. The exchange is also banking on its brand, the Sensex, and its 141-year pedigree, said a banker.

According to sources, BSE is eyeing a valuation between Rs 4,500 and Rs 6,000 crore in the IPO.

Market experts said although BSE has an edge, as it is likely to be the country's first stock exchange to list, it will have to answer investor queries on how it is placed against its bigger rival, National Stock Exchange (NSE).

"BSE will have to demonstrate to the shareholders how it will compete with NSE in terms of valuation and market share," said Harish H V, partner, Grant Thornton.

The issue will be entirely an offer for sale, where most of its top shareholders, including the Singapore Exchange, would offload their stake.

"As a lot of existing shareholders are exiting in the IPO, it might have a lot of explaining to do during the road shows. However, as entry barriers in the exchange business are high and it is a two-player race, it will still find a lot of buyers," said an investment banker, requesting anonymity.