All eyes on Rs 1,243-crore BSE IPO as first Indian bourse raises Rs 373 from anchor investors

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New Delhi | Published: January 23, 2017 10:52:56 AM

BSE Ltd’s IPO, which opens today, has investors and analysts keenly watching how India’s first domestic stock exchange’s initial public offering fares.

BSE Ltd, the owner of the Bombay Stock Exchange, has set the indicative price band for its initial public offering (IPO) at Rs 805-806 per share, looking to raise Rs 1,243 crore at the top end of the price range.(Reuters)BSE Ltd, the owner of the Bombay Stock Exchange, has set the indicative price band for its initial public offering (IPO) at Rs 805-806 per share, looking to raise Rs 1,243 crore at the top end of the price range.(Reuters)

BSE Ltd’s IPO, which opens today, has investors and analysts keenly watching how India’s first domestic stock exchange’s initial public offering fares. BSE Ltd, the owner of the Bombay Stock Exchange, has set the indicative price band for its initial public offering (IPO) at Rs 805-806 per share, looking to raise Rs 1,243 crore at the top end of the price range.

BSE Ltd has already raised Rs 373 crore from anchor investors, including DSP Blackrock, Reliance Capital Trustee Company, Citigroup, Kotak Mutual Fund, Goldman Sachs, Capital World, ICICI Prudential Fund, IDFC Mutual Fund and Kuwait Investment Authority Fund.

Asia’s oldest stock exchange owners’ IPO, which is set for January 23-25, will see some of BSE’s shareholders selling a total of 1.54 crore shares and will value the stock exchange at Rs 4,400 crore at the top end of the price range.

Some of the top BSE shareholders, who will sell their holdings in the offering, include Singapore Exchange Ltd and investment firm Acacia Banyan Partners, and proceeds from the sale will go to those investors.

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With 5,868 companies listed on the main board, it is the largest exchange by the number of listed companies. Currently, BSE has a 14% market share in the Equity cash segment. It is India’s largest and the world’s 10th largest exchange by market capitalisation, with $1.7 trillion in total market capitalisation of listed companies.

Potential ROI

Angel Broking recommends subscribing to the issue, citing reasonably priced valuations and potential upsides from rising equity investments in India. “With India remaining an attractive investment destination, BSE is likely to see decent growth in business,” Angel Broking said in a note. “While equity savings in India remains low, with other asset classes becoming less attractive, investor’s acceptance of equity as an investment is gaining the momentum,” it added.

Interestingly, BSE will be listed on the rival exchange NSE, due to SEBI’s regulations prohibiting exchanges from self-listing their stocks.

BSE earns revenues from transaction charges, depository charges, corporate fees, data selling and treasury income from clearing and settlement funds. BSE earns revenues from transaction charges, depository charges, corporate fees, data selling and treasury income from clearing and settlement funds.

Corporate fees includes annual listing fees, which every company needs to pay to remain listed on the exchange, and is an annuity business. Its accounts for about 21% of BSE’s revenues and has seen a healthy 20% CAGR over FY12-16 in revenues and provides a cushion against volatility in the markets, Angel Broking said.

Earlier December, the company started a spree of investor roadshows to attract people to buy into the issue

If successful, Bombay Stock Exchange will only be the second exchange, and first stock exchange, to be listed in India. Currently, Multi Commodity Exchange, originally promoted by businessman Jignesh Shah, is the only listed exchange in the country.

Singapore Exchange Ltd (SGX), which has 4.7% stake in BSE, will sell its entire 4.7% stake to make a complete exit. Another major investor selling its stake includes a Citigroup unit.

Eight merchant bankers are managing the issue, including Edelweiss Financial Services Ltd, Axis Capital Ltd, Jefferies India Pvt Ltd, Nomura Financial Advisory and Securities (India) Pvt Ltd and SBI Capital Markets Ltd.

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