Asia’s oldest exchange’s maiden public offer begins on Monday

Mumbai: Asia’s oldest stock exchange that has seen thousands of companies trade on the bourse is itself going for a listing with an initial public offer starting from Monday with an an offer size of nearly Rs 1,250 crore.

The offer is expected to get a healthy response as BSE has already allocated 4,628,158 equity shares to ‘Anchor Investors’ at an offer price of Rs 806 per equity share worth to Rs 373 crore.

The IPO will be the first issue to hit the markets in 2017 and will last from Monday to Wednesday.

The maiden public issue will off-load a total of 15,427,197 equity share (including anchor portion of 4,628,158 equity shares) with a face value of Rs 2 each via a book building route with a price band of Rs 805-Rs 806.

At the upper band, the size works out to Rs 1,243.43 crore.

“This may not be very cheap. But it is fair valuation for a leading stock exchange,” V.K. Vijayakumar, Chief Investment Strategist, Geojit BNP Paribas, told IANS.

The offer will constitute up to 28.26 per cent of the fully diluted ‘post-offer’ issued share capital of BSE. Bids have been invited for a minimum of 18 equity shares and in multiples of 18 equity shares thereafter.

Established on July 9, 1875, the company is the country’s biggest bourse in terms of listed companies with 5,868 (firms) on its platform. But the exchange’s own shares will trade on the rival National Stock Exchange (NSE) platform.

The BSE has helped create wealth of more than Rs 104 lakh crore ($1.5 trillion) and is ranked as the fastest stock exchange in the world with six micro seconds response time.

Now as a company, the BSE owns and operates the popular BSE exchange platform and has a 14 per cent market share in the “equity cash” segment.

The $1.71 trillion market capitalisation of listed companies on its platform makes it the 10th largest exchange in the world by market capitalisation.

As of last Friday, the total market capitalisation of BSE listed companies was Rs 11,023,189 crore with scrip of 2,897 companies being traded during the day’s trade session.

However, in terms of financial performance, the company’s net profit had declined by 5.6 per cent to Rs 123 crore during 2015-16 from Rs 130 crore reported for 2014-15.

On the other hand, the total income increased by 5.6 per cent to Rs 616 crore from Rs 584 crore.

“The exchange’s competitive position in the main stay cash equities business has declined year after year. However, it has done well with its SME (small and medium enterprises) exchange and with its mutual fund trading platform,” Dhruv Desai, Director and Chief Operating Officer of Tradebulls, told IANS.

“BSE IPO’s valuation looks attractive in comparison to the other listed exchange which is the MCX.”

The company operates in multiple segments such as — listings, securities services, corporate services and data dissemination.

In addition, the stock exchange major holds a 50.05 per cent stake in Central Depository Services (India) (CDSL) and 100 per cent stake in Indian Clearing Corp (ICCL).

“Its revenue mix is diversified and is not wholly dependent on market volumes,” Vijayakumar elaborated.

“Notably, BSE can unlock huge value for its stakeholders as most of its subsidiaries (ICCL, CDSL, BIL etc.) are profit making.”

Currently, the top shareholder’s of the company include Deutsche Boerse, Singapore Exchange, State Bank of India, Life Insurance Corp of India, GKFF Ventures, Quantum (M), Caldwell India Holdings Inc and Atticus Mauritius.

The global co-ordinators and book running lead managers (GCBRLMs) to the offer are Edelweiss Financial Services, Axis Capital, Jefferies India and Nomura Financial Advisory and Securities (India).