In NSE offer, FIIs look to shed most

Exchange's shareholders hopeful that initial public offering of shares will remain on track despite CEO exit

The National Stock Exchange (NSE) has finalised the list of shareholders that will be tendering their shares in its much-awaited initial public offering (IPO). 

The top three sellers in the IPO will be foreign institutional investors, while top shareholder Life Insurance Corporation of India (LIC) will not be selling any shares, said two people with the direct knowledge of the development.

The list was approved by the NSE board just a week before Chitra Ramakrishna stepped down as the exchange’s managing director (MD) and chief executive officer (CEO), added the people cited above.

“Almost all foreign investors, barring those whose shares are under lock-in, will be getting a part-exit in the IPO. Domestic investors, in comparison, will be selling fewer shares in the IPO,” said an official at one of NSE’s investors.

Foreign investors have been pushing NSE to go public for years to realise gains on their investments, some of which have been nearly a decade old.

The top shareholders that would be tendering their shares in the IPO include Aranda Investments, Saif Partners, Goldman Sachs, State Bank of India (SBI), IFCI, and Norwest Ventures, said sources.

The names of the exiting shareholders couldn’t immediately be verified with NSE. 

“The amount of shares that shareholders will get to sell in the IPO was decided on a pro-rata basis through a tendering process. Investors that wished to exit had to participate in the process, which started in October,” said a source. 

State-owned lender SBI, which owns 5.2 per cent in NSE, while its subsidiary SBI Capital Markets owns another 4.33 per cent. Another state-owned financial institution IFCI, along with its associate company Stock Holding Corporation of India, owns 4.44 per cent.  

Private equity firms Saif Partners and Aranda Investments, an arm of Singapore’s government's Temasek Holdings, own five per cent each. Goldman Sachs, Morgan Stanley, and Citibank are among top foreign investors, owning four, three, and two per cent, respectively.

NSE’s Top shareholders

The IPO will be a 25 per cent offer for sale (OFS) and will provide part-exit to more than a dozen shareholders. The issue size could be Rs 10,000 crore, which will value NSE at Rs 40,000 crore. However, a final call on the offer size would be taken ahead of the launch. 

NSE shareholders are hopeful that the IPO will remain on track despite Ramakrishna’s surprise exit, but they don't rule out a slight delay as the country’s largest exchange begins selecting a new chief. 

“Securities and Exchange Board of India process has to be followed for selecting MD and CEO, which could take a month or two. We have been told IPO is on track,” said a local shareholder of NSE. 

NSE’s board had given a nod for listing the exchange in India and aboard on June 23. The exchange then had said it would file its IPO document for domestic listing with Sebi by January 2017 and another for overseas listing by April 2017.

Sources said NSE’s may not obtain Sebi nod for overseas listing or even self-listing and it would have settle for cross listing on BSE.  

Meanwhile, NSE’s rival BSE has already filed its draft prospectus with the market regulator and is currently awaiting the regulator’s nod. Sebi has sought clarifications from BSE’s investment bankers on its IPO, as per information provided on the regulator’s website.