India's second-largest public sector lender Bank of Baroda (BoB) has proposed an auction to sell 21 lakh shares or its 0.42 percent stake in the National Stock Exchange of India (NSE) at a floor price of Rs 3,150 per share that values India's largest bourse at Rs 156,000 crore ($19 billion), way more than its biggest competitor Bombay Stock Exchange or BSE, which is valued at Rs 7,790 crore.
The state-run bank has invited bids from buyers, including insurance companies, corporates, mutual funds, banks, public sector units, foreign institutional investors, non-resident Indians, and high-net-worth individuals, for its stake sale through an exchange filing earlier on Monday. This will take the deal value to as much as Rs 661.5 crore.
However, partnership firms are not eligible to bid, according to reports. The last date to submit an offer is July 10, while pre-bid queries will be entertained between June 5 and June 15. The bids will be opened on Sunday (June 11).
The auction comes at a time when
NSE's big market debut is at a crossroad until pending legal and regulatory cases involving the nation's biggest bourse are resolved. The Securities and Exchange Board of India (SEBI) has formed a view that due to the pending cases it won't approve NSE's application made in 2022 for an IPO.
A delayed
public listing will test the patience of its core shareholders — banks, insurance companies and foreign funds — who have been waiting for an exit opportunity in rising markets. A listing would allow the stock exchange to have a broader shareholder base like BSE.
Earlier in 2016, NSE had targetted offering 10 percent of its total shares in a listing, and given the current 'grey' market valuation of Rs 2 lakh crore ($24.35 billion), the IPO size could be around $2.5 billion.
NSE is also the world's largest derivatives exchange in terms of contracts traded, and its core shareholders include Life Insurance Corporation of India,
State Bank of India, Canada Pension Plan Investment Board, a Tiger Global fund and a Morgan Stanley fund, among others.
The exchange has been embroiled in a long running case since 2016 related to equitable access to all its trading members. SEBI, in an order in April 2019, had faulted the exchange for not ensuring equitable access and fined it 11 billion rupees but the exchange challenged the order in the Securities Appellate Tribunal, a judicial authority.
In January 2023, SAT set aside some parts of the SEBI order and reduced the fine on the exchange but the matter was escalated by SEBI to the Supreme Court, which, on March 21, agreed to hear the matter.
Following the SAT order, shareholders of NSE sought clarity from the exchange on the likely timing of the public offering in an investor call in February, according to a transcript of the call uploaded on the exchange website.
In response, the exchange's CEO Ashish Chauhan said the matter is in the hands of the regulator.
“There are many legal matters pending across many courts in the country which may or may not have any bearing on the IPO at all," Chauhan added.
Apart from the ongoing case in the Supreme Court, SEBI is still finalising orders in two other cases involving NSE, a regulatory source told Reuters. These include whether certain brokers made unfair gains due to preferential access to NSE’s trading systems and another lapse in NSE’s trading architecture, the source said.
With Reuters inputs
(Edited by : C H Unnikrishnan)
First Published: Jun 6, 2023 1:21 PM IST
