An offer for sale (OFS) is expected to be the most likely route for BSE, the country’s oldest stock exchange, to get listed on the bourses since a fresh issue of shares to garner funds for the bourse is largely unnecessary, given the funds the bourse has in hand.
While officials at the stock exchange are tightlipped on anything to do with the listing, other than to say they have shortlisted 14 banks for the IPO process, informed sources say the OFS route will be taken to give existing investors in the exchange an exit route. BSE has key important foreign institutions and bourses invested in it.
“The exchange has enough cash, so the OFS is the expected route to be taken. The exchange doesn’t need cash from the issue. The investors need an exit option,” sources connected with the exchange said.
BSE has around 40 percent stake with trading members, 30 percent with domestic institutions and corporate and another 30 percent with foreign institutions. State Bank of India and Life Insurance Corporation (LIC) hold 5 percent each, while Central Bank of India holds a 2 percent stake. Among foreign investors, two major global bourses, Deutsche Boerse and Singapore Exchange (SGX) hold 5 percent each.
Recent reports have pegged the exchange’s expected valuation at between Rs 4,000-5,000 crore, though there is no independent confirmation of this figure. Bank of America-Merrill Lynch, JP Morgan, UBS and Barclays are among many others.
According to the exchange’s 2011-12 annual report and balance sheet, the bourse’s cash and cash equivalents position grew from Rs 1,497.5 crore as of March 31, 2011 to Rs 2,216.07 crore as at March 31, 2012. During FY12, the bourse’s total income grew 7.5 percent to Rs 578.42 crore with a profit of Rs 178.13 crore.
On the trading side, equities average daily turnover declined in FY12 to Rs 2,671 crore, down from Rs 4,318 crore the previous year which the exchange said was partly a result of the weak performance of the equity market in 2011 and partly due to the erosion of BSE’s market share in cash equity trading.
The net worth of the exchange on a consolidated basis grew to Rs 2,230 crore, a 5 percent increase over Rs 2,124.81 crore of the previous fiscal. In March 2012, BSE launched its Small-Medium Enterprise (SME) platform which now has 11 listed companies.