The shares of BSE Ltd, which came up with a much-hyped IPO earlier this year, are trading almost flat as the scrip completes six months of being listed. BSE Ltd’s shares had got a bumper opening in February after an overwhelming response to the first IPO of the new year 2017.
The shares of Asia’s oldest stock exchange’s owners opened for trading at Rs 1,085 on 3 February 2017, at a stellar 34.6% premium to its offer price of Rs 806 per share. But since the first day’s closing price of Rs 1,069.2, the stock has lost 0.18% to Rs 1,067.2 as of the close on Wednesday, 2 August 2017. Today, BSE Ltd’s shares hit the day’s low of Rs 1,055.05 which is 1.32% down from its first-day closing price and has since given disappointing returns in a market which has rallied to new highs this year.
However, the shares of BSE had cheered the IPO allottees early on, soaring to an all-time high of Rs 1,200 on the very first day of listing. Earlier this year BSE Ltd MD & CEO Ashishkumar Chauhan had said: “Listing fees and the mutual fund platform will be the primary revenue earners for BSE India,” adding that the trading revenues are also picking up.
BSE did not issue any fresh shares in the IPO, and only sold shares of its existing stakeholders, marking a complete exit of some of the existing prominent shareholders, including some of the founders. This was probably seen as a negative, as investors might have suspected a limited upside to the company’s business. Some of the top BSE shareholders, who sold their holdings in the offering, included Singapore Exchange Ltd, Quantum (M), Atticus Mauritius and Acacia Banyan Partners. Singapore Exchange Ltd (SGX), which had 4.7% stake in BSE, sold its entire 4.7% stake to make a complete exit.
Stiff market competition
BSE trails the rival NSE by a huge margin in equity cash and equity derivatives segment. BSE has only 14% market share equity cash trading. NSE, launched much later, commands over 80% of the market. Further, BSE’s equity derivatives segment turnover plummeted to a minuscule after it discontinued liquidity enhancement incentives in April 2016. Equity derivative contracts traded per day fell from the height of 20.80 lakh in the financial year 2014-15 to a mere 1,446 in the six months ended September 30, 2016. While other security trading have some potential, it remains to be seen how much of that will convert into revenue for BSE.
BSE Ltd’s IPO — the first mega IPO of the year — had got an overwhelming response with an oversubscription of over 50 times the issue size. The institutional investor had bid for 48 times the shares reserved under the category. It raised Rs 1,243 crore for its promoters and existing shareholders by selling a total of 1.54 crore shares. BSE Ltd is the owner of the Bombay Stock Exchange, Asia’s oldest stock exchange, and has about 9,500 member-shareholders. Interestingly, BSE is listed on the rival exchange NSE, due to SEBI’s regulations prohibiting exchanges from self-listing their stocks.