Calcutta Stock Exchange facing problems in demutualization

The Calcutta Stock Exchange (CSE) seems to be facing a huge problem in its demutualization scheme. After having failed its original deadline for soliciting expressions of interest (EoIs) on March 23, it has again failed in its efforts to rope in strategic investors, as it has received insufficient response to the revised deadline of March 5. It is now further extending the date for submitting EoIs to April 30.

The CSE and its consultant-advisor PriceWaterhouseCoopers are conducting road shows within India and overseas to hard-sell the benefits of picking up a stake in CSE. PriceWaterhouseCoopers has already made presentations to leading bourses in Asia. Some of them are interested, but the main hindrance is the 5% limit in investment

As per SEBI guidelines, all exchanges have to divest 51% to financial institutions (FIs), foreign institutional investors (FIIs) and corporate bodies other than broking outfits before August 2007. The guidelines state that no individual investor, be it FIs, FIIs or corporates, can hold more than 5% in an individual capacity in any stock exchange. The collective holding of the non-brokers would be 51%, whereas brokers would hold 49%.

Currently, there is very little trading which happens on the CSE, which was once India’s third largest bourse with a daily turnover in excess of Rs. 1000 crores.

Read the article in The Times of India article.
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Morgan Stanley, Citigroup, Actis buy 6% in NSE

Morgan Stanley, Citigroup, Actis buy 6% in NSE

Global banks Morgan Stanley and Citigroup and private equity firm Actis today collectively bought a 6% stake in the National Stock Exchange (NSE) for an undisclosed sum. The stake sale takes the combined foreign direct investment in the NSE to 26%, the maximum limit for foreign ownership in domestic stock exchanges. Morgan Stanley will buy 3% in the NSE, while Citigroup and Actis will acquire 2% and 1%, respectively.

Domestic financial institutions IDBI (2%), State Bank of India (1.5%), SBI Capital Markets (0.50%), Corporation Bank (0.265%), Union Bank of India (0.125%), Bank of Baroda (0.89%), Canara Bank (0.385%) and Oriental Bank of Commerce (0.335%) are selling their stakes to the three new investors.

Early this year, the parent company of the New York Stock Exchange (NYSE) and three global financial institutions, General Atlantic, Goldman Sachs and Softbank Asian Infrastructure Fund, bought 20% in NSE, valuing the exchange at $2.3 bn. NYSE had paid $115 mn for its 5% stake. Recently, Germany’s Deutsche Boerse and Singapore Exchange (SGX) bought 5% stake each in the Bombay Stock Exchange (BSE) for just over $ 42 mn. Yesterday, it was reported that the Calcutta Stock Exchange also plans to sell a 51% stake and has invited bids from investors and strategic partners, in keeping with Indian regulations that require broker-owned exchanges to reduce the stake held by members to 49%, in a bid to make exchanges professionally run. PricewaterhouseCoopers is the advisor to the proposed sale.

Read the Business Standard article.
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Singapore Stock Exchange takes 5% stake in BSE for $42.7 mn