Global multi-stage investment fund Norwest Venture Partners (NVP) has bought 2.11 per cent equity stake in India’s premier bourse National Stock Exchange (NSE) for about Rs 250 crore, valuing the exchange at over
Rs 12,000 crore (nearly $2.56 billion).
NVP bought the stake from IL&FS Securities Services at Rs 2,650 per share, which is higher compared to Rs 2,450 per share from the previous transaction on NSE shares.
The investment by NVP is being treated as foreign portfolio investment following a finance ministry notification in November 2008 that foreign institutional investors (FIIs) could hold up to 23 per of equity in an Indian exchange even if such an exchange is not listed.
The finance ministry notification has cleared the way for enhanced FII interest in the NSE, with NVP being the first FII to take advantage of this opportunity.
At present, the ceiling of 26 per cent foreign direct investment (FDI) prescribed in an Indian stock exchange is met in NSE. In January 2007, New York Stock Exchange, Goldman Sachs, General Atlantic and Softbank Asian Infrastructure Fund bought 5 per cent stake each in NSE for a total of $490 million. Five per cent is the maximum that an investor could hold in an exchange, as per the rules.
Later in March 2007, Morgan Stanley (3 per cent), Citigroup (2 per cent) and private equity fund Actis (1 per cent) bought 6 per cent in the exchange, taking the total FDI limit to the maximum allowed at 26 per cent. They bought the stake from IDBI (2 per cent), SBI (1.5 per cent), SBI Capital Markets (0.50 per cent), Corporation Bank (0.265 per cent), Union Bank of India (0.125 per cent), Bank of Baroda (0.89 per cent), Canara Bank (0.385 per cent)
and Oriental Bank
of Commerce (0.335
per cent).
NVP managing partner Promod Haque said: “We are extremely bullish on the value proposition that NSE offers to shareholders at a time when India is on the cusp of global influence.”
The transaction has been approved by the NSE board of directors and is expected to close within the next week.
Source: My Digital FC