Regional SEs get favourable response

The demutualisation of regional stock exchanges has received a good response as almost all regional stock exchanges have submitted their proposals to SEBI except the Hyderabad Stock Exchange Ltd (HSEL) as the stock exchange is facing some legal wrangles over its property.

Hyderabad Stock Exchange has apparently not filed the proposal to the Securities and Exchange Board of India (SEBI) as the exchange have not received any proposal from any of the prospective investors as the exchange is facing legal action on its property at Somajiguda in Hyderabad city.

To make matters worse, the rumours doing the rounds in the market is that the HSEL members are not interested in continuing with the exchange and most of members are interested in disposing of the exchange's property to gain from the sale of the property.

Vadodara Stock Exchange Ltd (VSE) and Ahmedabad Stock Exchange Ltd (ASE) have received a favourable response from the corporate world as both have received a bid for over 5 per cent of the share.

According to sources from the stock exchanges, the VSE received a bid for a 5 per cent stake in the VSE from nine corporate houses, while 30 applications have been received for 1 per cent, 2 per cent and 3 per cent stakes in VSE from various companies.

While 6 to 7 corporates have bid for the ASE stakes, a member of ASE told Business Standard that two of the bidders are listed companies, one is IL&FS, and rest of the five to six bidders are private firms.

The weighted average offer price that Vadodara Stock Exchange has received for its share is Rs 152. While the lowest and highest offer prices for VSE bid are Rs 130 and Rs 187 respectively, the face value is Rs 10 for each share of VSE. Ahmedabad Stock Exchange, on the other hand, received a bid of Rs 12 on the face value of Rs 1 per share.

According to the demutualisation rules, the regional stock exchanges have to divest 51 per cent of its member stakes. The bid for the requisite number of share haVe been received and now the stock exchanges have approached the SEBI for the necessary approval.

On contacting a prominent member of ASE, he confirmed that the exchange has been informed by its merchant banker that SEBI has given the approval to the ASE to allot the share to the bidders. ASE had appointed Chartered Capital as its merchant banker.

Out of the seven regional stock exchanges, only six regional stock exchanges have sought SEBI's permission to allow its respective bidders to pick up the stake in its exchange. The only stock exchange left out is the Hyderabad Stock Exchange Ltd (HSEL). HSEL is fighting a case against the Andhra Pradesh government and the case is in the high court.

The property at Somajiguda in Hyderabad falls under the Urban Land Ceiling Act, and was purchased in 1994. The exchange recently paid Rs 2.36 crore as regularisation fee for the land and building .

When Business Standard contacted G Someswara Rao, executive director of HSEL, he dismissed the market talks as mere rumours.

He said, "The members are very much interested in continuation of the exchange, but due to the legal problem faced with regard to the property, the exchange did not receive any prospective investors to pick up the stake in the exchange."

The exchange expects it to receive a stay order from the high court on the case within a week and will further approach the courts for extension of the SEBI deadline for demutualisation as the HSEL members are interested in divestment and to carry forward the demutualisation process.