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BSE to file for IPO this week

September 07, 2016 08:55 IST

Offer size could vary from Rs 1,200 cr to Rs 2,000 cr

Asia’s oldest bourse BSE will file the draft prospectus for its initial public offering (IPO) this week, according to two people familiar with the matter. The bourse will, then, begin roadshows to market the issue to institutional investors.

The issue size is expected to be close to Rs 1,200 crore (Rs 12 billion), based on the percentage of shares tendered during the offer for sale (OFS) and assuming a share price of Rs 400 apiece.

However, the Street is expecting the shares to be priced at Rs 500-660, pushing the issue size in the vicinity of Rs 1,500-2,000 crore (Rs 15-20 billion). BSE shares are currently quoting Rs 375-380 in the grey market, an 'over-the-counter market' where shares of a firm can be traded before it’s listed.

Offer details

BSE to file draft prospectus for its IPO this week, after which it will begin roadshows
Issue size expected to be Rs 1,200 crore, based on the percentage of shares tendered during the offer for sale and assuming a share price of Rs 400 apiece
Street expecting shares to be priced at Rs 500-650 apiece, pushing the issue size to Rs 1,500-2,000 crore
Domestic shareholders in BSE include LIC and State Bank of India

BSE had received a good response for its OFS, with shareholders tendering about 30 million shares or 30 per cent of the exchange's total equity share capital, during the process.

Shares not sold in the OFS would be locked-in for a year from the date of allotment/transfer of shares in the IPO. The sellers will receive the same sale price as the issue price for the IPO, net of expenses and applicable taxes.

BSE has appointed seven merchant bankers - Edelweiss Financial Services, Axis Capital, Jefferies, Nomura, Deutsche Bank, Motilal Oswal and SBI Capital Markets - to handle its IPO.

An SMS sent to BSE with regard to the filing did not get an immediate response.

The bourse’s consolidated net profit for 2015-16 declined 38 per cent to Rs 96.7 crore (Rs 967 million), from Rs 155.5 crore (Rs 1.55 billion) in the previous year.

The exchange has seen a dip in cash market volumes, its mainstay, and its volumes in the derivatives segment have dived to almost nil, after the exchange trimmed its incentive structure for market makers.

The exchange’s shareholders include foreign bourses Deutsche Boerse and Singapore Exchange, as well as domestic entities such as Life Insurance Corporation of India and State Bank of India, among others.

Earlier this year, BSE had told Sebi it had met the requirements of the amended regulations on the Stock Exchanges and Clearing Corporations (SECC) rule, and was in a position to proceed with its IPO.

Sebi had, via a January 1 notification, amended the SECC Regulations of 2012, making it easier for exchanges to list. The exchange had first approached Sebi with a listing plan in January 2013, but could not get the required in-principle approval, owing to a lack of clarity on SECC norms. In 2012, it had appointed 14 investment bankers to handle the IPO.

BSE’s rival National Stock Exchange of India recently appointed Citigroup Global Markets, JM Financial Institutional Securities, Kotak Mahindra Capital and Morgan Stanley India as joint global coordinators to manage its IPO.

Photograph: Danish Siddiqui/Reuters

Ashley Coutinho in Mumbai
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