Apart from BSE, bourse may opt for SGX, LSE platform

India’s largest bourse NSE has finally bitten the bullet, announcing its plans to file the draft red herring prospectus (DRHP) for listing in India latest by January 2017. In addition, the bourse has also decided to list overseas and is likely to file its draft prospectus by April 2017. These decisions were taken at the NSE’s board meeting on Thursday, June 23.

A statement from the NSE said: “The board of directors of the exchange — subject to shareholders’ approval — has expressed desire to file the DRHP latest by January 2017, after addressing restructuring needs of the exchange and the regulatory requirements for listing.”

Cross listing possibility

The board has reconstituted the present listing committee of the NSE as an empowered sub-committee of the board — to take decisions within the specified time frame.

As on date, SEBI regulations do not allow an exchange to list on itself, something which the NSE wants to do.

So the only option left is to list on its rival BSE. With the BSE also wanting to list so as to provide an exit route to its shareholders, it seems that both these bourses would end up eventually listing on each other’s platform.

As far as foreign listing is concerned, it is gathered that SGX (where the Nifty is widely traded) and the London Stock Exchange are the top two contenders where the NSE might choose to list.

Plea from investors

The NSE’s listing would take about six-nine months after the DRHP is filed. Decisions on merchant bankers and the bourses are yet to be taken forward and would be done only after the empowered sub-committee meets for taking the proposal to list.

A number of small investors in the NSE had been pushing for a listing as an exit route. Investors, including Aranda Investments, GTI Capital Epsilon, Norwest Venture Partners and SAIF, had written to the exchange not to delay the listing any further. It is gathered that the bourse in a shareholder meeting on June 26, 2015, had told its investors that it was undertaking a restructuring exercise aimed at creating a new entity comprising new lines of businesses, such as a trade receivables discounting system, International Financial Centre (GIFT City) and other potential mergers and acquisitions.

The bourse’s idea was to ensure that its regulated businesses were ring-fenced and that the holding company had the ability to grow without the framework applicable to a regulated entity. It was added that self-listing would create shareholder value, help investors get the best price discovery platform with liquidity and hedge the price risk in the derivatives market.

However, the small investors opposed these moves and sought a speedy listing.

(This article was published on June 27, 2016)