 "NSE hopeful of settling colocation issue in six months")
The National Stock Exchange of India (NSE) is hopeful that its initial public offering (IPO) can go through after the colocation issue is resolved. “I am hopeful that the colocation issue will be resolved in the next six months, and the IPO timeline will be driven by that,” the bourse’s chief, Vikram Limaye, told Business Standard on Thursday. But he denied there was any specific timeline set for the IPO.
In a meeting with shareholders last week, Limaye had assuaged concerns that the IPO was getting indefinitely delayed and told shareholders that the NSE would refile its offer document as soon as the colocation issue was resolved, said two people familiar with the matter.
He also expressed optimism that capital markets regulator Securities and Exchange Board of India (Sebi) would settle the colocation matter through the consent mechanism route, although the Sebi may be free to pursue an investigation against the select individual employees.
Major shareholders in the exchange include Life Insurance Corporation with a 12.5 per cent stake, and Gagil FDI, Aranda Investments and SAIF II SE Investments, holding five per cent each.
The NSE had filed its draft prospectus for a Rs 10,000-crore IPO last December. The IPO, an offer for sale of 111.4 million equity shares, was put on hold after allegations of unfair access to certain brokers snowballed into a major issue.
The embattled exchange is now looking for solace from a consent mechanism, which will allow it to settle the colocation issue with the regulator without admission or denial of any wrongdoing, possibly by paying a steep penalty. “The application has been filed under the settlement regulations of Sebi. Sebi will review the application and get back to the NSE on the future course of action. The NSE will work with Sebi on an early resolution of this matter,” the exchange had said in a release last month.
“The BSE’s listing earlier this year has set a precedent and merchant banks, law firms as well as Sebi are well-acquainted with the requirements for a stock exchange listing. From that standpoint, Sebi is unlikely to sit on the NSE’s DRHP (draft red herring prospectus, whenever it is refiled) for too long, and the exchange may be able to meet the new deadline provided the colocation issue is settled and the exchange is able to follow up on whatever is prescribed by the regulator,” said Tejesh Chitlangi, partner, IC Legal. Limaye took charge as managing director and chief executive of the exchange on July 17, over seven months after his predecessor Chitra Ramkrishna quit unexpectedly.