5% NSE shares on selling block

However,IDBI Capital did not disclose details like name of its client,exact number of shares and price being sought by the unnamed NSE shareholder.

As per the last major dealing in NSE shares,which occurred late last year valuing the bourse at more than USD 4 billion (over Rs 18,000 crore),a five per cent stake in the country’s biggest stock exchange could be in the vicinity of Rs 900-1,000 crore.

IDBI Capital,which has asked the interested parties to submit their bids by March 11,also said that NSE itself is not a party to the proposed transaction.

However,NSE would have a right to approve or reject any transfer of shares,it added.

When contacted,NSE officials also said that they had no role in any stake transfer between different investors. IDBI Capital said that the buyer could be a foreign institutional investor (FII),a resident Indian individual investor or any other domestic entity.

While name of the shareholder wanting to sell NSE stake could not be ascertained,sources said that the investor might be an FII and could decide to sell its holding due to a proposed regulatory move to bar bourses from getting listed.

A high-profile panel,set up by regulator Sebi,late last year recommended that the stock exchanges should not be allowed to list and their profits should also be capped.

The recommendations,on which Sebi is yet to take a final call,have created an impression that investing in stock exchanges is no longer a value proposition for FIIs,which consider listing as a good exit opportunity for their investments,market sources said.

Various private sector entities from India and abroad together hold nearly half the equity in NSE,while the remaining stake is owned by public sector banks,financial institutions and insurance companies.

In November 2010,Financial Technologies,which has floated a new stock exchange MCX-SX rivalling NSE,announced sale of its 4.4 lakh shares in National Stock Exchange for a price of Rs 3,800 per share,aggregating to Rs 167.2 crore.

These shares accounted for less than one per cent stake of NSE and the deal is said to have valued the bourse at over USD 4.5 billion.

NSE and FTIL used to have one per cent stake in each other,but NSE sold the shares held by it in 2009. FTIL group sold majority of its one per cent stake and held back some.

While stakes were given to each other by NSE and MCX group as a kind of token investment,a bitter rivalry has emerged between the two over the past couple of years.

Starting with the differences over the exchange software solutions previously supplied by FTIL to NSE,the rivalry went on to another level when MCX group came into direct competition with NSE with the launch of exchange business for trading in non-commodity securities.

MCX-SX currently provides currency futures trading,while Sebi last year rejected its application for stock trading. The Sebi order was later challenged in the Bombay High Court.

Earlier,in 2008,a clutch of investors,including SHCIL and IFCI sold part of their stakes in NSE at a price of Rs 3,500 per share,valuing it at over USD four billion.

In another deal involving NSE shares,NYSE Euronext in May 2010 offloaded its entire five per cent stake in National Stock Exchange for USD 175 million (nearly Rs 780 crore).

The stake,which was acquired by NYSE for USD 115 million in 2007,was acquired by Singapore government’s investment arm Temasek Holdings. This deal values NSE at USD 3.5 billion.

NSE is promoted by leading financial institutions,banks,insurance companies and other financial intermediaries of the country and they include IDBI,IFCI,LIC,SBI and ICICI Bank.

Other promoters include IL&FS,SHCIL,SBI Capital Markets,Bank of Baroda,Canara Bank,General Insurance Corp,National Insurance Co,New India Assurance Co,Oriental Insurance Co,United India Insurance Co,PNB,Oriental Bank of Commerce,Indian Bank,Union Bank and IDFC.