NSE shares lapped up at Rs 3,500

NSE shares lapped up at Rs 3,500

INDIA’S leading stock exchange—National Stock Exchange (NSE)—continues to attract stronger investor interest compared to its embattled rival—Bombay Stock Exchange (BSE).

At a time when some BSE members have expressed willingness to sell their shares at a price lower than that paid by institutional investors, Hero Honda and Srei Infrastructure Finance have bought some NSE shares from IFCI and Stock Holding Corporation of India (SHCIL), respectively, at Rs 3,500 apiece. This is the same rate at which NSE shares were sold by Life Insurance Corporation (LIC) in April this year.

SHCIL will earn Rs 20.02 crore by selling 57,200 shares while IFCI will net Rs 42 crore from 1.20 crore shares.

This pegs NSE’s valuation at close to $4 billion while the valuation of its rival exchange has declined to a little less than $1 billion. Stock market players said there are few takers for BSE shares at Rs 4,500 per share or so. At the height of the market boom, Deutsche Borse had paid Rs 5,200 per share for a 5% stake in the country’s oldest stock exchange. As for NSE, its share price has risen from Rs 2,100 to Rs 3,500. The decline in the valuation of BSE is largely because it has been steadily losing market share to NSE. Futures perfect

NSE now accounts for almost the entire derivative market and 60% share of the cash market.
Confirming the development, IFCI chief executive and managing director Atul Kumar Rai said the share sale is aimed at bringing down its shareholding in NSE to 5% as mandated by capital market regulator Sebi. Senior SHCIL officials said they are looking at selling their stake, but declined to provide more details. SHCIL has a 7.11% stake in NSE. Officials in financial institutions said even after the sale of 52,000 shares, SHCIL will continue to hold much higher than 5% in NSE.

The sale of shares by the two entities is close to the September 2008 deadline set by Sebi on single shareholder limit. Sebi has said no single shareholder can hold more than 5% stake in an exchange.

At the end of March 31, 2008, LIC, State Bank of India, Infrastructure Development Finance Corporation and SHCIL held more than 5% in NSE. In July, SBI had appointed SBI Caps for selling its excess shares in the bourse.

In January 2007, IFCI, ICICI Bank, GIC, IL&FS and PNB divested their holdings aggregating 20% in NSE to NYSE Group, Goldman Sachs, General Atlantic and Softbank Asian Infrastructure Fund. The shares were sold in the band of Rs 2,250-2,500, which pegged the valuation of NSE at $2.30-2.50 billion.