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Norwest Venture buys 2.11% in NSE for Rs 250 cr

Business Standard:  June 04, 2009

New Delhi: Deal values exchange at Rs 11,848 cr

The US-based Norwest Venture Partners (NVP) has bought 2.11 per cent stake in National Stock Exchange of India (NSE) from IL&FS Securities Services for Rs 250 crore, valuing the exchange at Rs 11,848 crore.

The investment is being made under the FII (foreign institutional investor) category as the NSE has already reached the 26 per cent foreign direct investment (FDI) limit in stock exchanges.

Under the current norms, a stock exchange may divest up to 49 per cent to foreign investors. This includes up to 26 per cent FDI and another 23 per cent FII investment.

Confirming the transaction, a senior official of IL&FS said after the transaction, his company would have exited completely from the NSE, the country’s largest stock exchange. Originally, IL&FS had 7 per cent stake in the company. The other major shareholders are SBI (around 10 per cent), LIC (around 12 per cent) and IFCI (4.5 per cent).

Ravi Narain, managing director and chief executive officer of NSE, said, “NVP is an important addition to our marquee group of pedigreed global financial investors and will contribute to building value as we continue to grow and expand our leadership position in India.”

NVP, promoted by investor Promod Haque, is a global, multi-stage investment firm that manages more than $2.5 billion capital.

“We are extremely bullish on the value proposition that the NSE offers shareholders at a time when India is on the cusp of global influence. The NSE is regarded as one of the best operated exchanges globally, with world-class technology systems, a proven management team, and a wide range of products and industry leading processes that are unrivaled in the industry,” said Haque, managing partner, NVP.

In January 2007, the New York Stock Exchange (NYSE) and three financial investors — General Atlantic, Goldman Sachs and Softbank Asian Infrastructure Fund — had picked up 5 per cent each in the NSE for $490 million (Rs 2,205 crore). At that time, the company was valued at Rs 11,250 crore. The stake was sold by IFCI (7 per cent), IL&FS (5 per cent), ICICI (5 per cent), GIC (2 per cent) and Punjab National Bank (1 per cent).

In the second phase, three other investors —Citibank, Morgan Stanley and Actis Group — bought 6 per cent stake from IDBI (2 per cent), SBI (1.50 per cent), SBI Capital Markets (0.50) per cent, Corporation Bank (0.265 per cent), Union Bank of India (0.125 per cent), Bank of Baroda (0.89 per cent), Canara Bank (0.385 per cent) and Oriental Bank of Commerce (0.335 per cent).

Bombay Stock Exchange, the country’s oldest stock exchange, had divested 5 per cent each to Frankfurt-based Deutsche Borse and Singapore Stock Exchange at the enterprise valuation of $910 million.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.