Peepul Capital-backed Madras Stock Exchange (MSE) is planning to raise around Rs 100 crore through private placement and through IPO.
The fund raising will help the 76-year old Exchange to meet market regulator Securities and Exchange Board of India (Sebi's) mandate of Rs 100 crore networth and Rs 1,000 crore of annual turnover. Meanwhile, the Exchange also seems to be on the verge of inking a deal with the National Securities Clearing Corporation Ltd (NSCCL), a subsidiary of National Stock Exchange (NSE), for clearing and trading operations.
K N Ramanath, managing director, Madras Stock Exchange confirmed the plan. While refusing to share names of PE funds, he said few funds are in talks with the Exchange. It may be noted that Peepul Capital already holds less than 5% stake in the Exchange.
He said that while Rs 40 crore will be raised through private placement in 2013-14, the Exchange will go for IPO, sometime in 2014-15 for another Rs 60 crore.
In May 2012, Sebi issued guidelines on “Exit Policy” for non-operational/ non-recognised Stock Exchanges and on June 20, 2013 it notified Securities Contracts Regulation (Stock Exchanges and Clearing Corporations) Regulation 2012, requiring Exchanges to have a minimum networth of Rs 100 crore, own trading platform with an average annual turnover of Rs 1,000 crore.
While many Regional Stock Exchanges have decided to opt for the Exit Policy, MSE decided to look at all possible options to meet the mandate.
To meet the second mandate, which is average annual turnover of Rs 1,000 crore through own trading platform, Ramanath said it is easily achievable, thanks to the strong membership base.
According to the Section 13 arrangement with the National Stock Exchange, the collective turnover of the MSE listed companies which are trading at NSE platform in 2012-13 was at around Rs 8,000 crore and this is expected to increase to Rs 19,907 crore in 2017-18.
There are 260 companies listed in Madras Stock Exchange, of which only 63 are trading under the new arrangements. In another year, Rs 8,000 crore trade volume can be added, said the source.
Some of the major companies which are listed at MSE include Ashok Leyland, Simpson Group companies, TVS Group companies, India Cements, Dalmia Cents, MRF, Aban Offshore, Orchid Pharma, Amrutanjan Limited, Chennai Petroleum Corporation, MMTC, NMDC, Shipping Corporation of India, State Bank of India and others.
The Exchange has said to have an in-principle tie-up with NSCCL for clearing and trading operations and EOI received from companies listed with MSE to trade on the new platform.
“We are the only stock exchange to apply for revival of the Platform. We are hoping that the platform will be ready before end of this fiscal,” said Ramanath.
Going forward with the new platform, the Exchange is planning to look at more of a hub and spoke model, targeted mostly at the MSMEs.
Meanwhile sources said already a senior level team from Sebi has visited MSE and its disaster center at Hyderabad. At present MSE has around 200 shareholders, including 120 trade members and 80 non-trading members.