India investors join IPO chorus for NSE

After foreign PE investors, domestic entities IFCI, SBI, IDBI Bank pressure National Stock Exchange to get self-listed

Government-owned entities have begun to mount pressure on the National Stock Exchange of India (NSE) to expedite its listing process.

Besides foreign private equity (PE) companies, domestic entities like IFCI, State Bank of India (SBI) and IDBI Bank have now expressed disapproval over the delay in getting the exchange listed.

“It (the listing) will help us monetise part of our investments. Without listing, sale and purchase of NSE shares becomes a rather difficult process. We have conveyed this to NSE," said a senior official at IFCI. Along with its subsidiary, Stock Holding Corporation, it owns around 8.8 per cent in the bourse.

IFCI recently offloaded 0.17 per cent and 1.5 per cent in the exchange for Rs 29.6 crore and Rs 263 crore, respectively.

SBI, the country’s largest lender, has also recently written to the NSE management in this regard. “SBI participated in developing public infrastructure for the capital market by supporting entities like NSE and the Clearing Corporation of India. These are unlisted companies and a true discovery of price can happen only when it is widely traded. This is possible only for listed shares. Listing of NSE shares should happen sooner than later,” said a senior SBI official.

SBI and subsidiary SBI Capital Markets together hold around 15 per cent in NSE.

An official at IDBI Bank said it had sought clarity on two issues. “One, treatment of the investor protection fund and, second, the regulatory powers of an exchange once it is listed, as there’s a possibility of a conflict of interest.”

A group of nine investors — mostly PE players which together hold almost 20 per cent stake in NSE — had recently written a letter to the chairman of the exchange, opposing the latter's restructuring plan. Dated January 13, it stated the merits of undertaking the restructuring had not been satisfactorily demonstrated by the NSE management to shareholders. The restructuring, said the letter, could lead to a further delay in the listing of the company, potential tax liabilities and loss in shareholder value due to the exercise.

NSE seeking Sebi approval for self-listng: Ravi Narain

There is a view emerging in certain quarters the National Stock Exchange is not keen on listing. That view is misplaced. It has been clearly articulated by the management recently that the board (of directors) has taken a view to go ahead with listing. The key issue is of securing nod for self-listing. Given NSE’s superior liquidity and efficiency, not to do so would be highly inappropriate and unfair to the investors. At the same time, NSE should allow its securities to trade on other exchanges, as well as additional venues. If you look at the global benchmarks, virtually every exchange that has gone down the path of listing has chosen self-listing.  So, to go ahead and not list on NSE is not a good solution. NSE’s record shows it is good at executing swiftly on decisions taken, and now the board has taken a decision to list, there is every confidence NSE will list in short order.

Ravi Narain
Vice-chairman, NSE

The nine investors, including foreign entities Tiger Global and SAIF Partners, requested NSE not to proceed with the restructuring plan or seek approval for it from the Securities and Exchange Board of India (Sebi).

“A restructuring plan needs Sebi's in-principle consent. It is only logical that the exchange explore regulatory feasibility for the said process. Besides, during the past few months, NSE did have formal meetings with shareholders where the same was discussed. A restructuring plan was envisaged for ring-fencing the core regulatory function of the exchange, post listing,” an NSE spokesperson said in an e-mailed response.

The January letter further requested the exchange to file an in-principle approval application for listing with Sebi within the next 30 days and simultaneously start the ground work for listing, including appointment of investment bankers.

The demand for listing has grown stronger in recent weeks after the market regulator relaxed its ‘fit and proper’ norms. The new rules allow shareholders in an exchange to certify if they are fit and proper to hold a stake in a bourse. Sebi has said shareholders will need to seek Sebi’s approval within 15 days of acquisition for purchasing more than two per cent of the shares in a listed exchange, while those wanting to acquire beyond five per cent will have to seek prior approval.