— AFP Photo

BULLISH ON BOURSE: Chief Financial Officer and Executive Vice-President of the New York Stock Exchange (NYSE) Group, Nelson Chai (right), with the Managing Director and Chief Executive Officer of the National Stock Exchange (NSE), Ravi Narain, in New Delhi on Wednesday.

NEW DELHI: Heralding the entry of foreign investors for shareholdings in the country's bourses, the New York Stock Exchange (NYSE), in partnership with Goldman Sachs and two other private equity funds, on Wednesday inked a deal for a 20 per cent stake in the National Stock Exchange (NSE).

With this deal valued at $490 million, the enterprise value of the country's largest stock exchange in effect gets automatically pegged at about $2.5 billion.

Divesting a part of their holdings in the NSE were Punjab National Bank, Infrastructure Leasing & Financial Services (IL&FS), ICICI, the Industrial Finance Corporation of India (IFCI) and the General Insurance Corporation (GIC). Representatives of these five financial institutions signed share purchase agreements with the four partners in the consortium in which the private equity funds are the U.S.-based General Atlantic and Softbank Asian Infrastructure Fund based in Hong Kong. Each of them is to pick up a five per cent stake in the stock exchange.

Offloading stakes in their favour are IFCI seven per cent and IL&FS and ICICI five per cent each, while GIC and PNB sold two per cent and one per cent, respectively.

"As of today, NSE and NYSE are committed to working with each other,'' NYSE Group Chief Financial Officer and Executive Vice-President Nelson Chai said, when asked if NYSE would be willing to pick up holdings in the Bombay Stock Exchange (BSE) also.

The sale of NSE's equity stake, it may be recalled, has come within a month of the Centre's decision on opening up stock exchanges to FDI and portfolio investment. As per the decision, foreign investment is permitted in stock exchanges up to 49 per cent with a cap on FDI at 26 per cent and the FII limit fixed at 23 per cent. However, as stipulated by the market regulator SEBI, no single investor is allowed to pick up a stake of more than five per cent.

Following the deal, NSE MD and CEO Ravi Narain noted that the strategic sale of NSE equity to NYSE and other investors would help the bourse go global and increase its customer-investor and product base.

The BSE has also begun an exercise of scouting for strategic global investors. Nasdaq, the London Stock Exchange and Singapore Exchange are said to be the front-runners for a deal in this regard. Talking about NYSE Group interest in Asia, Mr Chai said that opportunities in China were being explored as well. However, no specific exchange has been approached as yet.

PTI reports:

When asked about the IPO plan, Mr. Narain said, "there has been no discussion or planning for an IPO.''

"We do not see need for additional capital to fund the growth plan of NSE,'' he said, adding that capital was not a constraint.

State Bank of India is among other shareholders of NSE, which has an average daily traded value in equity of $2 billion and the national average daily traded value in equity derivatives of $7 billion.

Talking about NYSE Group interest in the Asian region, Mr. Chai said, the exchange was exploring opportunities in China as well but had not approached any specific exchange in that country.

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