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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SBI, IDBI and others to sell 11% stake in NSE

State Bank of India along with Indian Overseas Bank, Union Bank of India, Corporation Bank and IDBI are looking to sell upto a combined 11% stake in the National Stock Exchange. This follows the sale of a 20% stake by five other leading financial institutions in the exchange.

Several private equity players such as Blackstone and Actis have shown interest in buying the stake. Earlier, the New York Stock Exchange (NYSE), Goldman Sachs, General Atlantic and Softbank Asian Infrastructure Fund bought 5% each in NSE from a consortium of five domestic financial institutions. IFCI sold 7% for Rs. 779 crores, while both ICICI Bank and IL&FS divested 5% each for around Rs. 550 crores. GIC sold 2% for Rs. 205 crores and PNB sold 1% stake for Rs. 102 crores. The sudden interest in NSE from foreign players comes after the Reserve Bank of India allowed foreign investment of up to 49% in stock exchanges, fixing the foreign direct investment cap at 26% and foreign institutional investor limit at 23%. Rules stipulate that no single entity can hold more than 5% in a stock exchange.

Read the Business Standard article.
Related Post: NYSE, Goldman Sachs, General Atlantic, SAIF to buy 26% in NSE

Goldman Sachs to pick up 5% stake in ITNL for Rs. 90 crores

Goldman Sachs is about to pick a 5% equity stake in IL&FS Transportation Networks (ITNL) for around Rs. 90 crores. ITNL is a vehicle promoted by IL&FS to spearhead its initiative in transportation infrastructure development.

This will be the second private placement in ITNL in the last three months. In October 2006, US-based private equity fund Trikona Capital bought 2.5% stake in the company for around Rs. 40 crores. Trikona also announced a $100-mn partnership with parent company IL&FS for investments in real estate and infrastructure.

ITNL is the promoter of the Noida toll road project and owns 22.6% equity in Noida Toll Bridge Company. Noida Toll Bridge is listed on the AIM market in London Stock Exchange. ITNL currently has a portfolio of 10-11 road sub-sector projects, which are in the development phase and a pipeline of such projects in the planning phase. The company, which has got road projects in Ahmedabad, Rajasthan, has recently won an annuity contract in Chhattisgarh. Incorporated in 2000, IL&FS has domiciled most of its transport sector investments and resources in ITNL for its surface transportation projects. The company also intends to participate in green field projects and provide advisory services. Already, the holdings of IL&FS and existing financial investors in the IL&FS sponsored projects are being transferred to ITNL.

Last week, Goldman Sachs bought a 5% stake in the National Stock Exchange. IL&FS was one of the deal makers in the transaction.

Read The Economic Times article.

NYSE, Goldman Sachs, General Atlantic, SAIF to buy 26% in NSE

The New York Stock Exchange (NYSE) and US-based global investment banking giant Goldman Sachs are among a group of institutional investors who are about to buy around a 5% stake each in National Stock Exchange (NSE), India’s biggest bourse. The NYSE, Goldman Sachs, General Atlantic Partners and Softbank Asian Infrastructure Fund have entered into an agreement with ICICI Bank, IFCI, IL&FS, PNB and GIC for the purchase.

NSE shareholders IL&FS and IFCI are selling 5% each of their holdings in the exchange to Goldman Sachs and NYSE in two separate deals expected to be signed soon. The two shareholders currently hold 7.1% each in the exchange. IDBI and ICICI Bank, the two other institutional promoters, are also expected to offload part of their holdings in the exchange in subsequent deals. The valuation of the NSE is expected to be over $2 billion.

Earlier, Fidelity had bought around 9% in MCX; later, Goldman acquired over 7% in NCDEX, the other online commodity exchange.

The proposed sale of stakes comes close on the heels of guidelines issued by the RBI on foreign investment in Indian stock exchanges. The RBI has allowed foreign investment up to 49% in stock exchanges, fixing foreign direct investment (FDI) cap at 26% and FII limit at 23%. Securities and Exchange Board of India (SEBI) has stipulated investment limit for single foreign investor at 5% beyond which an FII or any other investor like foreign stock exchange will not raise its stake in stock exchanges.

NSE has 21 promoters: an assorted medley of public sector banks, LIC, ICICI Bank, IL&FS and IDFC. ICICI holds 12.5% and IL&FS has 7.1%. NSE is an extremely profitable entity. In FY06, it had a net profit of Rs. 206 crores on revenues of Rs. 472 crores. In FY07 it is expected to report a profit of Rs. 250 crores. It has 70% share of all stock transactions in India.

Read more about the deal in The Economic Times and IndiaInfoline.com.