BSE Ltd, Asia’s oldest stock exchange, is looking to launch its initial public offering (IPO) before the end of this calendar year to raise up to Rs 800 crore.
The exchange and the intermediaries it has hired are working on regulatory aspects of the IPO, and the draft share-sale prospectus is expected to be filed before the end of the April-June quarter. The size of the IPO is likely to be Rs 700-800 crore. The exchange is looking at a valuation of close to Rs 6,000 crore for the public share sale.
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BSE is looking at September or October to launch the public offer. The exchange business is a very well-regulated space and therefore BSE has most of the regulation-related things in place, which will make work quicker.
Work on the IPO has been under way since January, when the BSE invited three or four merchant banks to initiate work on the share sale. BSE hopes to complete the formalities within 9 to 12 months. BSE has already appointed merchant bankers and lawyers for the purpose of preparing of documents including DRHP (draft red herring prospectus).
BSE restarted its IPO process soon after the Securities and Exchange Board of India (Sebi) notified amendments to the Stock Exchanges and Clearing Corporations regulations on 1 January. The amendments were aimed at making it easier for exchanges to list.
In a letter dated 22 January, BSE told Sebi that it was fully compliant with Sebi regulations and ready for an IPO. On 12 March, Sebi said that it had granted in-principle nod to BSE for an IPO, which would give its investors an opportunity to exit.
BSE counts foreign stock exchanges such as Deutsche Boerse AG and Singapore Exchange Ltd among its shareholders. Other investors include Life Insurance Corporation of India, State Bank of India and Bajaj Holdings and Investment Ltd. Foreign investors such as US billionaire George Soros’s hedge fund Quantum’s Mauritius investment arm Quantum (M) Ltd, Canada-based investor Thomas Caldwell’s Caldwell India Holdings Inc. and US fund Argonaut Private Equity are also investors in the exchange.
In 2010, when Soros bought a 3.9% stake in BSE for about Rs.160 crore from Dubai Financial Group, the exchange was valued at around Rs.4,000 crore.
For the fiscal year ended 31 March 2015, BSE reported revenue of Rs.624.75 crore, up 18% from the Rs.529.82 crore it earned in the previous year. In 2014-15, its profit stood at Rs.155.53 crore, up from Rs.135.19 crore in the previous year. The exchange business is expected to grow strongly as the economy expands and market capitalization of listed companies increases, said Deven Choksey, group managing director and CEO of KR Choksey Shares and Securities Pvt. Ltd.
Currently, Multi Commodity Exchange of India Ltd is the only listed exchange in the country.