The Securities and Exchange Board of India (Sebi) decision to cap the individual equity holding in stock exchanges at 5 per cent is likely to discourage global bourses, including the likes of New York Stock Exchange (NYSE) and Nasdaq, from buying equity stakes in Bombay Stock Exchange (BSE). | |
| Though the government policy on foreign direct investment (FDI) in stock exchanges is still awaited, Sebi sources said the individual limit of 5 per cent will be applicable within the to-be-prescribed FDI/FII limit by the government "� be it 26 per cent or 49 per cent. |
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| It is felt that global bourses wanted a bigger slice in BSE and the present prescribed limit of 5 per cent will find no suitors from among the global bourses. |
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| "Global exchanges may not find 5 per cent stake in BSE attractive enough," said an investment banker, who is connected with the MCX issue. "At the current individual ceiling of 5 per cent, only foreign institutional investors would be interested," he added. |
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| The names of global exchanges, such as NYSE, Nasdaq, Australian stock exchange; FIIs, such as Goldman Sachs, Nomura and Fidelity; and private equity investor Tamasek, among others, have been doing the rounds ever since BSE announced plans to sell 26 per cent stake to strategic investors in July. |
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| Analysts said the 5 per cent individual stipulation is also likely to bring down the valuation of BSE, Asia's oldest stock exchange. |
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| Bankers were hoping for a valuation of $700 million to $1 billion for BSE. "Even a valuation of $700 million looks to be far fetched now," said an analyst with a brokerage outfit. |
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| BSE has 800-odd members, who were allotted 10,000 shares of Re 1 each following its corporatisation. At an aggressive pricing of Rs 3,000 a share, the BSE valuation works out to be only Rs 2,400 crore (about $533 million). |
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| There are others who feel BSE may not command more than Rs 1,500 a share. But, a BSE member pointed out that real estate assets and its reserves of Rs 900-odd crore would also come into play while valuing the exchange. "BSE may not be a growth story, but it is an exciting story," said a banker. |
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| In terms of growth potential, however, the exchange cuts a sorry figure when compared with National Stock Exchange (NSE). BSE's derivative segment is yet to take off in a major way, despite several attempts, while NSE's derivatives segment logs in over Rs 30,000 crore on a daily basis. Similarly, half of BSE's over-4,000 listed stocks are not even traded. |
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