 "NSE offer: Windfall gains for some")
Global investors, including venture capital funds and private equity investors, are eyeing handsome returns in the coming initial public offer (IPO) of equity in the National Stock Exchange (NSE), exiting at around three to four times their initial investment.
This is substantially higher than the return earned by the bourse’s investors as late as last year.
Business Standard’s analysis was based on the widely reported valuation of Rs 10,000 crore after the bourse filed a draft prospectus for the IPO earlier this week. This values the bourse at around Rs 45,000 crore. The draft says 111.41 million shares would be sold by 27 existing shareholders. This works out to Rs 898 a share.
Temasek arm Aranda Investments, which holds 24.75 million shares or five per cent in the bourse, is selling 9.9 million shares. At the reported valuation, this would fetch Rs 890 crore. It had paid Rs 270 crore to acquire these in May 2010, from NYSE Euronext for $150 million.
SAIF Partners, among the four foreign investors (alongside NYSE, Goldman Sachs and General Atlantic) that first picked a five per cent stake in NSE in 2007, is also selling 9.9 million of its 24.75 million shareholding. General Atlantic’s GAGIL FDI is selling 8.6 million shares for Rs 777.5 crore, while Goldman Sachs Strategic Investments is selling 6.75 million shares for Rs 605 crore.
These four investors took five per cent each for $115 million (the dollar was then Rs 44) in that initial round, valuing the bourse at the time for $2.3 billion (Rs 10,170 crore). Their 10-year wait will fetch a return of about 4.4 times. However, the close-to-50 per cent appreciation in the dollar against the rupee would eat into the take-home returns.
Norwest Venture Partners is selling 7.84 million of its shares acquired for Rs 187 crore. This would fetch close to Rs 700 crore. Citigroup Strategic Holdings (Rs 666 crore), Morgan Stanley’s MS Strategic (Rs 400 crore) and the George Soros-advised Quantum (M) (Rs 380 crore) are among the selling shareholders. A clutch of banks and domestic institutions are also offering their shares. According to the draft prospectus, the net asset value of NSE equity shares, as of September, was Rs 120.04 each on a standalone basis and Rs 142.58 on a consolidated basis. A bonus issue of 1:10 and a split of Rs 10 shares into Rs 1 each in the weeks ahead of the filing have come as a needed icing on the cake for these investors.
In October 2015, private equity major Actis had sold its NSE shares at almost the same price it bought, valuing the bourse at Rs 17,800 crore as regulatory uncertainty and the management’s reluctance had made the road to the IPO a hazy one. In June-July, State Bank of India sold five per cent to Mauritius-based Veracity for Rs 911 crore, at a valuation of Rs 18,220 crore.
However, after the appointment of former Competition Commission chief Ashok Chawla as chairman, the exchange made quick strides, culminating in the draft prospectus earlier this week.
Veracity Investments is not among those selling shareholders, as Sebi regulations require a minimum holding period of one year to participate in such offers. However, it would get an opportunity to book handsome profits once the shares begin trading. That would be a couple of months away. The Securities and Exchange Board of India takes a minimum of four to six weeks to clear IPO filings. This could extend if the regulator has queries. Rival BSE (formerly Bombay Stock Exchange), which filed its IPO documents in early September, is still awaiting clearance.
This is substantially higher than the return earned by the bourse’s investors as late as last year.
Business Standard’s analysis was based on the widely reported valuation of Rs 10,000 crore after the bourse filed a draft prospectus for the IPO earlier this week. This values the bourse at around Rs 45,000 crore. The draft says 111.41 million shares would be sold by 27 existing shareholders. This works out to Rs 898 a share.
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Tiger Global, the largest selling shareholder, is exiting by selling its 14.85 million shares. This would fetch Rs 1,333 crore or 2.8 times of its initial investment. It had bought these shares for $97.4 million (Rs 470 crore) in a secondary transaction during 2009.
Temasek arm Aranda Investments, which holds 24.75 million shares or five per cent in the bourse, is selling 9.9 million shares. At the reported valuation, this would fetch Rs 890 crore. It had paid Rs 270 crore to acquire these in May 2010, from NYSE Euronext for $150 million.
SAIF Partners, among the four foreign investors (alongside NYSE, Goldman Sachs and General Atlantic) that first picked a five per cent stake in NSE in 2007, is also selling 9.9 million of its 24.75 million shareholding. General Atlantic’s GAGIL FDI is selling 8.6 million shares for Rs 777.5 crore, while Goldman Sachs Strategic Investments is selling 6.75 million shares for Rs 605 crore.
These four investors took five per cent each for $115 million (the dollar was then Rs 44) in that initial round, valuing the bourse at the time for $2.3 billion (Rs 10,170 crore). Their 10-year wait will fetch a return of about 4.4 times. However, the close-to-50 per cent appreciation in the dollar against the rupee would eat into the take-home returns.
Norwest Venture Partners is selling 7.84 million of its shares acquired for Rs 187 crore. This would fetch close to Rs 700 crore. Citigroup Strategic Holdings (Rs 666 crore), Morgan Stanley’s MS Strategic (Rs 400 crore) and the George Soros-advised Quantum (M) (Rs 380 crore) are among the selling shareholders. A clutch of banks and domestic institutions are also offering their shares. According to the draft prospectus, the net asset value of NSE equity shares, as of September, was Rs 120.04 each on a standalone basis and Rs 142.58 on a consolidated basis. A bonus issue of 1:10 and a split of Rs 10 shares into Rs 1 each in the weeks ahead of the filing have come as a needed icing on the cake for these investors.
In October 2015, private equity major Actis had sold its NSE shares at almost the same price it bought, valuing the bourse at Rs 17,800 crore as regulatory uncertainty and the management’s reluctance had made the road to the IPO a hazy one. In June-July, State Bank of India sold five per cent to Mauritius-based Veracity for Rs 911 crore, at a valuation of Rs 18,220 crore.
However, after the appointment of former Competition Commission chief Ashok Chawla as chairman, the exchange made quick strides, culminating in the draft prospectus earlier this week.
Veracity Investments is not among those selling shareholders, as Sebi regulations require a minimum holding period of one year to participate in such offers. However, it would get an opportunity to book handsome profits once the shares begin trading. That would be a couple of months away. The Securities and Exchange Board of India takes a minimum of four to six weeks to clear IPO filings. This could extend if the regulator has queries. Rival BSE (formerly Bombay Stock Exchange), which filed its IPO documents in early September, is still awaiting clearance.