Canadian investment firm plans to buy 5% stake in NSE

Canadian investment firm Urbana Corporation has said it is looking to buy a 5 per cent stake in India's largest bourse National Stock Exchange (NSE), for an estimated Rs 600 crore.

For the intended acquisition, Urbana's investment firm Caldwell Investment Management has signed an agreement with leading financial intermediary IL&FS to identify the banks and institutional shareholders of NSE, who are interested in selling their equity.

Earlier this month, another overseas fund Norwest Venture Partners signed an agreement to acquire a 2.11 per cent stake in NSE from IL&FS Securities Services for Rs 250 crore, valuing the exchange at over Rs 12,000 crore.

Urbana, which already holds about 4 per cent stake in another Indian bourse the Bombay Stock Exchange, is also looking to raise funds in its home market through sale of shares and warrants to fund its purchase of NSE stake.

"Urbana intends to use the net proceeds of the offering to purchase equity shares in the National Stock Exchange of India," the Toronto-listed company said in its offer document filed with Canadian market regulator CSA.Urbana's investment manager, Caldwell Investment Management (CIM), has entered into a non-binding term sheet with financial services firm IL&FS to facilitate the buyout of 5 per cent stake in the NSE from banks and other institutions to be identified, it added.

" ...IL&FS has expressed an intention to facilitate the acquisition of the equity shares of NSE from banks and other institutions to be identified," the offer document stated.

The statement said Urbana expected to acquire NSE stake within a reasonable time following closing of its current prospectus offering.

However, it warned that "while Urbana intends to use the net proceeds of the offering to purchase equity shares in NSE, there can be no assurance that equity shares in the NSE will be available for purchase after the closing of the offering or that Urbana will be able to buy such shares on terms acceptable to Urbana".

If it fails to acquire NSE shares, the funds could be utilised for buying stake in other stock or derivative bourse.

Urbana also holds equity in NYSE Euronext and Chicago Board Options Exchange, among other bourses.

Caldwell is registered as an FII in India with the market regulator Sebi and is looking to acquire the NSE shares through FII route, as the FDI limit of 26 per cent has already been reached in the bourse.