Peepul Capital-backed Madras Stock Exchange (MSE) is planning to raise around Rs 100 crore through private placement and would also go for an IPO. The fund raising will help MSE meet the Securities and Exchange Board of India (Sebi) mandate of Rs 100 crore net worth and Rs 1,000 crore annual turnover.
K N Ramanath, managing director, Madras Stock Exchange, confirmed the plan. He said they were in talks with a few PE funds while refusing to share their names. Peepul Capital already holds less than five per cent stake in MSE.
Ramanath said while Rs 40 crore would be raised through private placement in 2013-14, the exchange would go for an IPO sometime in 2014-15 for another Rs 60 crore.
Sebi had in May 2012 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 has decided to look at all possible options to meet the mandate.
For the second mandate, which is an average annual turnover of Rs 1,000 crore through own trading platform, Ramanath said it was easily achievable, thanks to the strong membership base. At present, MSE has around 200 shareholders, including 120 trade members and 80 non-trading members.
The collective turnover of the MSE-listed companies trading on the NSE platform was around Rs 8,000 crore in 2012-13 and this is expected to increase to Rs 19,907 crore in 2017-18. There are 260 companies listed under MSE, of which only 63 are trading under the new arrangements. In a matter of one year another Rs 8,000 crore trade volume can be added, said a source.
Some of the major companies listed on the MSE include Ashok Leyland, Simpson Group companies, TVS Group, India Cements, Dalmia Cents, MRF, Aban Offshore, Orchid Pharma, Amrutanjan Ltd, Chennai Petroleum Corporation, MMTC, NMDC, Shipping Corporation of India and State Bank of India.
Meanwhile, the exchange is also on the verge of inking a deal with National Securities Clearing Corporation Ltd (NSCCL), a subsidiary of National Stock Exchange (NSE), for clearing and trading operations. It is 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 the platform will be ready before the end of this fiscal,” said Ramanath.
Going forward with the new platform, the exchange is planning to look at more hub and spoke model, targeting mostly the MSMEs.The sources said a senior-level team from Sebi had visited MSE and its disaster centre in Hyderabad.