Group of 17 overseas investors including Goldman Sachs, Temasek and Morgan Stanley feel listing of BSE and NSE would help in improving governance and transparency, open Indian financial markets to new classes of regulated investors like long-term capital providers such as pension funds
New Delhi : Large foreign investors including Goldman Sachs, Temasek and Morgan Stanley have approached the government to expedite the process for listing of top stock exchanges BSE and NSE, where they hold significant stakes.
This group of 17 overseas investors, which also includes Deutsche Boerse, Singapore Exchange, Argonaut PE, SAIF Partners, Tiger Global, Acacia Partners and General Atlantic, has said that the listing of the bourses would help various public sector entities and others who have invested there. These investors together hold 31.12 % in NSE and 25.30 % stake in BSE.
In a letter addressed to Finance Minister Arun Jaitley, they said each of them have “long-term commitment to India” and steps like listing of exchanges can help in the government’s plans to deepen India’s financial markets and make India a global financial hub. Copies of the letter have also been sent to the Prime Minister’s Office, capital markets regulator Sebi and the two exchanges.
The listing of exchanges have been hanging fire for a long time in India, even as the regulator Sebi had put in place a regulatory framework in this regard more than three years ago.
In the meantime, an interesting development has taken place following merger of commodities regulator FMC with Sebi, which has led to all commodity exchanges becoming securities exchanges.
The largest commodity bourse MCX is already listed and the unified norms have made it a listed stock exchange as well theoretically, even as BSE continues to seek listing. Since then, BSE has approached Sebi several times with its plans for an IPO, but necessary clearances have not been forthcoming on one or other issue.
Last week also, Sebi Chairman U K Sinha said that the regulator would “very soon” issue fresh guidelines for listing of the exchanges. “There are some impediments with respect to the listing norms but we are hoping to resolve them very soon,” Sinha had said, while adding that the sub-committees have submitted their report on listing norms for exchanges and the regulator is now looking into it.
Foreign investors, as also some domestic institutions such as SBI, have been pressing for listing of the bourses for a long time to get an opportunity to monetise their holdings in part or full, but the exchanges’ IPOs continue to get delayed amid lack of regulatory clarity on the matter.
As per existing Sebi norms, exchanges can get listed provided they put in place appropriate mechanisms for tackling conflicts of interest. However, the exchanges are not allowed to list on their own platforms. Still, there remain some regulatory gaps that are coming in way of their listings.
“In the evolutionary process of any stock exchange, ‘listing’ is the next logical step after demutualisation,” the group of 17 investors said in their memorandum.
Listing out the benefits of the IPOs, these shareholders said that listing of BSE and NSE would help in improving governance and transparency, open the Indian financial markets to new classes of regulated investors like long-term capital providers such as pension funds and key investors would continue to keep their faith in the country.
A number of foreign and domestic investors have already begun the process of liquidating their stakes in NSE in recent months through private transactions in the absence of the IPO. These include private equity major Actis, while some public sector entities like IFCI and IDBI Bank are also looking to further dilute their holdings.
