Global exchanges eye rejig via BSE IPO

Singapore Exchange to sell stake, Deutsche Borse to raise holding

The much-awaited Initial Public Offering (IPO, of shares) from stock exchange BSE could lead to a rejig of the shareholding in it of two global bourses.

According to sources, the Singapore Stock Exchange which currently owns 4.75 per cent stake in BSE is looking at offloading its stake. Deutsche Borse is keen on raising its stake from 4.75 per cent at present to 15 per cent, said sources.

BSE is likely to file its draft prospectus with the Securities Exchange Board of India (Sebi) after its audited March quarter numbers are ready, said a source.

GOING PUBLIC

• Exchange to file offer document with Sebi in July
   
• BSE aims to launch IPO before December 2016
   
• Issue will comprise of 20% share sale by existing investors
   
• Pricing likely to be between Rs 400 and Rs  600 per share
   
• Exchange valuation likely to be over Rs  6,500 cr ($1 bn)

In an e-mail response, the Singapore Exchange declined to comment. A BSE spokesperson didn't respond.

The IPO will be entirely an offer for sale (OFS) and not involve an issue of new shares. Around 20 per cent of BSE’s equity is likely to be offloaded. It aims to launch the IPO before December, said a person cited earlier. The issue price is likely to be between Rs 400 and Rs 600 a share, the person added.

If true, that would be higher than in recent off-market deals. BSE’s shares have recently changed hands at Rs 335 each in such deals, said a broker. At Rs 600, the exchange will be valued around Rs 3,700 crore.

The decision by Deutsche Borse to increase its stake is after the government’s decision to allow foreign holding in Indian exchanges up to 15 per cent, from five per cent earlier. “The new amendment is likely to be notified by July,” said a market expert, on condition of anonymity.

BSE has reportedly appointed investment banks to manage its IPO. Edelweiss is the main lead manager, said an exchange official. The exchange initiated the IPO process three months earlier, when Sebi notified amendments in its clearing corporation regulations, in January, allowing exchanges to list. The same month, BSE told Sebi it was fully compliant with the regulator terms and wished to go public through an IPO. Sebi had given an in-principle nod on March 12.

At present, the Multi Commodity Exchange is the only listed one.

Nearly 28 per cent of the BSE shareholding is with corporate and individual trading members. The average holding of each broker is 65,000 shares. There are 1,250 brokers, of which 1,000 are active.