BSE IPO: 12 things to know about Asia's oldest stock exchange
The first initial public offering (IPO) of 2017 will open on January 23. BSE’s IPO, the first by a domestic stock exchange, is aiming to raise Rs 1,243 crore through its issue, which will close on January 25. The bourse has fixed the price band at Rs 805-806 per share.
The IPO of 15,427,197 shares of face value of Rs 2 each, will constitute up to 28.26 percent of the fully-diluted post offer issued share capital of BSE. Bids for the issue can be made for a minimum of 18 shares and in multiples of 18.
It has raised Rs 373 crore by allotting shares to anchor investors Goldman Sachs Asset Management, ICICI Prudential Mutual Fund, Kotak Mutual Fund, Citigroup, IDFC Mutual Fund, DSP Blackrock, Capital World, Reliance Capital Trustee Company and Kuwait Investment Authority Fund.
So, as you gear up for the IPO, here are 10 things to know about Asia’s oldest stock exchange -- which was formed on July 9, 1875.
#1 Bajaj Holdings Investment, Caldwell India Holdings, Acacia Banyan Partners, Singapore Exchange, Mauritius-based arm of American investor George Soros’ Quantum Fund and foreign fund Atticus are few of its existing shareholders.
#2 There are around 9,000 shareholders in BSE. At the end of October 2016, the BSE was world's largest exchange by number of listed companies, and India's largest and the world's 11th largest exchange by market capitalization, with USD 1.7 trillion in total market capitalisation of listed companies. It has 5,868 listed companies as on October 2016.
#3 It operates in three primary lines of businesses. BSE’s revenue is comprised of revenue from operations, which consists of (i) revenue from securities services, (ii) revenue from services to corporates and (iii) revenue from data dissemination fees, income from investment and deposits and other income.
It also has other supporting businesses including providing IT services and solutions.
#4 BSE derives its revenue from a number of sources, including securities services, services to corporate, data dissemination fees, investments and deposits, and other sources. For FY2014, FY2015 and FY2016 and the six months ended September 30, 2016, its revenue from operations was Rs 2,667.9 million, Rs 3,611.4 million, Rs 4,265.4 million and Rs 2,421.8 million, respectively, and its net profit after share of minority and share of loss of associate as restated was Rs 1,351.9 million, Rs 1,297.4 million, Rs 1,225.3 million and Rs 1049.3 million, respectively.
#5 For BSE and NSE, revenue is primarily derived from securities services and services to corporates, which primarily consists of listing income. Information services contribute little to the revenue of Indian exchanges, contributing to approximately 4 percent to 5 percent. On the other hand, information services generally account for 10 percent to 25 percent of the total revenue for exchanges in developed economies.
#6 BSE shares will be listed on NSE as SEBI rules do not allow self-listing for an exchange.
#7 Objects of the offer are to achieve benefits of listing the equity shares on NSE and for sale of equity shares by the selling shareholders. BSE will not receive any proceeds of the offer and all the proceeds of the offer will go to the selling shareholders in the proportion of the equity shares offered by them.
#8 BSE invests a considerable 12-13 percent of its revenue into technology.
#9 In April 2016, it discontinued liquidity enhancement incentive programs, which were introduced to enhance liquidity in its futures and options (F&O). Following this, there was a sharp decline in equity derivatives trading on its exchange from FY 2015 to FY2016 and for the six months ended September 30, 2016, decreasing by 99.9 percent from its height of 2,080,160 equity derivative contracts traded per day in FY 2015 to 1,446 in the six months ended September 30, 2016. One of the key concerns is BSE may not be able to maintain or increase trading in its equity derivatives segment and there is no guarantee that it will be able to compete in this segment with the NSE.
#10 As BSE’s total revenue is dependent in part on equities, a historically volatile product, as well as on a number of external factors, such as trading activity and price levels on its markets, its total revenue and profitability may fluctuate from one period to another. Further, a large proportion of its expenses, such as personnel expenses, equipment and intangible assets maintenance, taxes (other than income tax), amortisation of intangible assets and depreciation of property and equipment, are fixed in the short term.
#11 As of December 24, 2016, it held 50.05 percent of the share capital in subsidiary, CDSL, which it must reduce to no more than 24 percent by March 31, 2017. Given the timeframe to come into compliance, there may be pricing pressure which may affect the ability to bargain and as a result, materially adversely affect CDSL's valuation upon divestment. Further, there can be no assurance that the sell down of CDSL will take place and even if it does, whether it will be able to comply.
#12 According to media reports, an investor body has accused BSE of incomplete disclosures in the offer document. Midas Touch Investors Association, the association led by Noida-based Virender Jain said that certain important and material facts have been concealed and not-disclosed in the prospectus.
Source: Moneycontrol.com
The IPO of 15,427,197 shares of face value of Rs 2 each, will constitute up to 28.26 percent of the fully-diluted post offer issued share capital of BSE. Bids for the issue can be made for a minimum of 18 shares and in multiples of 18.
It has raised Rs 373 crore by allotting shares to anchor investors Goldman Sachs Asset Management, ICICI Prudential Mutual Fund, Kotak Mutual Fund, Citigroup, IDFC Mutual Fund, DSP Blackrock, Capital World, Reliance Capital Trustee Company and Kuwait Investment Authority Fund.
So, as you gear up for the IPO, here are 10 things to know about Asia’s oldest stock exchange -- which was formed on July 9, 1875.
#1 Bajaj Holdings Investment, Caldwell India Holdings, Acacia Banyan Partners, Singapore Exchange, Mauritius-based arm of American investor George Soros’ Quantum Fund and foreign fund Atticus are few of its existing shareholders.
#2 There are around 9,000 shareholders in BSE. At the end of October 2016, the BSE was world's largest exchange by number of listed companies, and India's largest and the world's 11th largest exchange by market capitalization, with USD 1.7 trillion in total market capitalisation of listed companies. It has 5,868 listed companies as on October 2016.
#3 It operates in three primary lines of businesses. BSE’s revenue is comprised of revenue from operations, which consists of (i) revenue from securities services, (ii) revenue from services to corporates and (iii) revenue from data dissemination fees, income from investment and deposits and other income.
It also has other supporting businesses including providing IT services and solutions.
#4 BSE derives its revenue from a number of sources, including securities services, services to corporate, data dissemination fees, investments and deposits, and other sources. For FY2014, FY2015 and FY2016 and the six months ended September 30, 2016, its revenue from operations was Rs 2,667.9 million, Rs 3,611.4 million, Rs 4,265.4 million and Rs 2,421.8 million, respectively, and its net profit after share of minority and share of loss of associate as restated was Rs 1,351.9 million, Rs 1,297.4 million, Rs 1,225.3 million and Rs 1049.3 million, respectively.
#5 For BSE and NSE, revenue is primarily derived from securities services and services to corporates, which primarily consists of listing income. Information services contribute little to the revenue of Indian exchanges, contributing to approximately 4 percent to 5 percent. On the other hand, information services generally account for 10 percent to 25 percent of the total revenue for exchanges in developed economies.
#6 BSE shares will be listed on NSE as SEBI rules do not allow self-listing for an exchange.
#7 Objects of the offer are to achieve benefits of listing the equity shares on NSE and for sale of equity shares by the selling shareholders. BSE will not receive any proceeds of the offer and all the proceeds of the offer will go to the selling shareholders in the proportion of the equity shares offered by them.
#8 BSE invests a considerable 12-13 percent of its revenue into technology.
#9 In April 2016, it discontinued liquidity enhancement incentive programs, which were introduced to enhance liquidity in its futures and options (F&O). Following this, there was a sharp decline in equity derivatives trading on its exchange from FY 2015 to FY2016 and for the six months ended September 30, 2016, decreasing by 99.9 percent from its height of 2,080,160 equity derivative contracts traded per day in FY 2015 to 1,446 in the six months ended September 30, 2016. One of the key concerns is BSE may not be able to maintain or increase trading in its equity derivatives segment and there is no guarantee that it will be able to compete in this segment with the NSE.
#10 As BSE’s total revenue is dependent in part on equities, a historically volatile product, as well as on a number of external factors, such as trading activity and price levels on its markets, its total revenue and profitability may fluctuate from one period to another. Further, a large proportion of its expenses, such as personnel expenses, equipment and intangible assets maintenance, taxes (other than income tax), amortisation of intangible assets and depreciation of property and equipment, are fixed in the short term.
#11 As of December 24, 2016, it held 50.05 percent of the share capital in subsidiary, CDSL, which it must reduce to no more than 24 percent by March 31, 2017. Given the timeframe to come into compliance, there may be pricing pressure which may affect the ability to bargain and as a result, materially adversely affect CDSL's valuation upon divestment. Further, there can be no assurance that the sell down of CDSL will take place and even if it does, whether it will be able to comply.
#12 According to media reports, an investor body has accused BSE of incomplete disclosures in the offer document. Midas Touch Investors Association, the association led by Noida-based Virender Jain said that certain important and material facts have been concealed and not-disclosed in the prospectus.
Source: Moneycontrol.com
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