Initial glitches over, BSE readies itself for the maiden IPO

Asia’s oldest and first stock exchange BSE (Bombay Stock Exchange) has taken its first concrete step towards an initial public offering (IPO), which would offer its investors the opportunity for an exit. The stock exchange has hired merchant bankers and a legal team for the issue.

Making way for listing of the stock exchanges, markets regulator  SEBI announced in early January, stating detailed guidelines for their compliance to disclosure and listing regulations including ensuring 'fit and proper' status of every investor in the bourses.

BSE has been trying to come up with a new issue since long. But could not proceed with same as the capital markets watchdog SEBI has been of the view that necessary safeguards need to be first put in place for tackling conflict of interest and other issues.

In an earlier communication with the market regulator SEBI (Securities Exchange Board of India), BSE has informed that it is fully compliant with SEBI regulations and is ready for an IPO. According to media reports BSE has appointed Edelweiss Financial Services as the lead merchant banker for the issue, whereas AZB & Partners and Nishith Desai Associates will be the legal advisors to the issue.

The exchange had requested SEBI to provide approval "permitting BSE to proceed with the IPO and listing of BSE's shares on a recognised stock exchange". The exchange has also separately clarified that it is okay with listing on another bourse, in keeping with the regulatory requirements.

BSE counts foreign stock exchanges such as Deutsche Boerse AG and Singapore Exchange Ltd among its shareholders. Domestic investors include Life Insurance Corporation of India, State Bank of India and Bajaj Holdings and Investment Ltd. Foreign investors such as billionaire George Soros’s hedge fund Quantum’s Mauritius investment, Canada-based investor Thomas Caldwell’s Caldwell India Holdings Inc. and US fund Argonaut Private Equity are also investors in the exchange. IPO would give an exit option for the existing shareholders.

Rival exchange NSE (National Stock Exchange) has also been contemplating to come with its own IPO, and is pitching for self-listing but SEBI is averse to having it self-listed and prefers a cross listing on a recognized stock exchange.

At present, Multi Commodity Exchange of India (MCX) is the only listed exchange in the country as it is listed on both BSE and NSE.