 "IPO")
While the National Stock Exchange of India's (NSE) plan for an initial public offering (IPO) of equity seems stuck, rival BSE has begun the ground work, appointing the lead merchant banker and legal team for its coming issue.
Edelweiss Financial Services will be lead merchant banker, while AZB & Partners and Nishith Desai Associates will be legal counsel to the issue. According to sources, the exchange will finalise the remaining set of bankers after the required nod from the markets regulator, Securities and Exchange Board of India (Sebi).
"Edelweiss will oversee all documentation, including filing of the offer document, and directly coordinate with Sebi for the public offer," said a person familiar with the matter.
In 2012, BSE had hired as many as 14 investment banks to manage its IPO. These included domestic i-banks such as Kotak Mahindra Capital, Edelweiss Financial Services, ICICI Securities and Axis Capital, and foreign ones such as Bank of America Merrill Lynch, Barclays, UBS and JPMorgan Chase. Sources said many of these bankers are likely to be retained this time. BSE had in a letter dated January 22 told Sebi it had met the requirements of the amended regulations on Stock Exchanges and Clearing Corporations (SECC), and was in a position to proceed. Sebi had, via a January 1 notification, amended the SECC Regulations, 2012, making it easier for exchanges to list.
The exchange has also separately clarified that it is okay with listing on another bourse, in keeping with the regulatory requirements. "BSE has no objection in providing compliance-related details on a timely basis to the NSE, so that it is disseminated to investors immediately for taking informed decisions," said the exchange in an e-mail response to Business Standard. Last year, the exchange had set up a committee to monitor the milestones needed to be achieved before a listing.
The exchange is likely to dilute 25 per cent through an offer for sale from existing investors.
Shareholders in BSE presently include Life Insurance Corporation of India, State Bank of India and Bajaj Holdings and Investment. Foreign investors include stock exchanges Deutsche Boerse AG and Singapore Exchange, US fund Argonaut Private Equity, George Soros's hedge fund Quantum's Mauritius investment arm, Quantum (M), and Caldwell India Holdings, owned by Canada-based investor Thomas Caldwell.
BSE had first approached Sebi with a listing plan in January 2013 but could not get the required in-principle approval, owing to a lack of clarity on SECC norms. The amended guidelines allow shareholders in an exchange to certify if they are 'fit and proper' to hold a stake in an exchange. Sebi has said shareholders will need to seek Sebi's approval within 15 days of acquisition, for purchasing more than two per cent shares in a listed exchange, while those wanting to acquire beyond five per cent will need prior approval.
