Just how valuable BSE is? ...USD1 billion it says


Three cheers to Bombay Stock Exchange (BSE) which is planning to come up with an IPO next year. The exchange has selected 14 banks including Bank of America Merrill Lynch, JPMorgan, Barclays Capital, and UBS for its IPO planned during the first-half of 2013. This is certainly not the first bourse to get listed but it is also not commonplace to find exchanges seeking public money. To be fair, public money comes with a lot of strings attached including increased public scrutiny and higher pressure to maintain corporate governance. Now this is arguably a difficult task in this line of business, it is therefore intriguing what prompted BSE to get a public listing. The exchange is not short of cash for sure.

Multi Commodity Exchange (MCX) is already listed and has a market capitalization of nearly INR78.81 billion (USD1.44 billion). Incidentally, BSE is also seeking a valuation in excess of USD1 billion, according to chief executive Ashishkumar Chauhan. Arms of Indian banks Kotak Mahindra Bank and ICICI Bank are also among the lead managers of the planned IPO, Chauhn said adding, "The process is on. We are targeting a launch in the first half of next year.”

Founded in 1875, the BSE, formerly known as Bombay Stock Exchange Ltd, has long considered an IPO. India's capital markets regulator in April approved listing of local stock exchanges, subject to some conditions.

BSE claims it is the world's No. 1 exchange in terms of listed members, with about 5,000 companies listed on it. At some point in time, it used to be the largest exchange in terms of trading volumes as well; however, opaqueness in its dealings and a resistance in adopting new technology pushed it behind National Stock Exchange which was founded in 1993.

Frankfurt-based Deutsche Boerse and the Singapore Exchange own a 5 per cent stake each in BSE, whose Sensex remains the benchmark stock index alongside the rival NSE's Nifty. Equity participation by Deutsche Boerse and Singapore Exchange may be the reason behind the IPO as it would offer an exit route to these investors.

Comments

Post a Comment

Popular posts from this blog

Startup Valuations: Too much, too early?

Corporate valuations of the cleantech firms have always been an issue of fervent debate. On one hand, a set of market participants advocates usage of traditional valuation methods (discounted cash flow, comparable company analysis etc.) to arrive at a figure, while another school of thought propagates the consideration of intangible variables like the impact of new technology on common masses and the quantum change the technology promises to bring in daily life of an average user. Automotive battery and electric vehicle manufacturers are no exceptions with a number of low sales, concept stage companies receiving high valuations. Here are a few examples. A123Systems Inc. The company was incubated in MIT in 2001. After initial rounds of funding and dropping the original idea of self-organizing batteries, A123 scored big with a contract to supply batteries to Black & Decker power tools in 2005. The company has raised around US$300m in as much as six rounds of funding excluding the com...
Read more

Alternative Propulsion Systems: ETV Motors gets US$12m in initial round of funding

Alternative energy storage and powertrain investments have been on rise lately. Apart from many venture capitalists taking a U-turn on their investment policies ( Vinod Khosla being the prominent one), encashing the old industrial investments and dedicating significant portion of their corpus for clean technology (Former president candidate Al Gore's Generation Investment Management Fund et al). After the recently completed investments of Berkshire Hathaway in BYD and GE ’s investment in A123 (battery manufacturer) and Think Global (makers of TH!NK City electric vehicle), an Israeli company has raised US$12m in Series A funding for the development of electric vehicle propulsion technology. Quercus Trust and 21Ventures LLC jointly invested in ETV Motors . The company is developing micro-turbine technology , another possible ‘game changer’ in plug-in hybrid-electric vehicle (PHEV) market. ETV is contelplating the vehicle propulsion system as a combination of high voltage lithium...
Read more

GIPL: Where the angels fear to tread

Gammon Infrastructure Projects Ltd (GIPL) may join the list of withdrawn IPOs due to lack of subscription. GIPL is offering 11.45% of its post-issue paid up capital for a price of Rs 167 to Rs 200 per share. This translates into a range of Rs 276.385 crore to Rs 331 crore. Accordingly the company is valued in the range of Rs 2413.8 crore to Rs 2890.8 crore. These valuations are difficult to justify by any standards particularly when the stock markets are bleeding. The fact that the company is asking for a Price Earnings (PE) ratio of over 100 based on Estimated FY08 earnings is simply ridiculous. At this time, Infrastructure companies with sound financials like IVRCL Infra are available at a Trailing Twelve Month (TTM) PE ratio of 27 . It was only last month when investors saw Infra IPOs like KNR and IRB trading below their issue price. While the chips are down after the Budget and retail investors shying away from share markets, subscription of the retail portion (30%) looks a dis...
Read more