BSE eyes IPO next year, seeks $1 billion value

BSE Ltd, the former Bombay Stock Exchange which has lost market share to rivals, has chosen 14 banks for a share offering planned for the first half of 2013, its chief executive said.

The company, which operates Asia's oldest stock exchange, is seeking an initial public share offering or IPO that would value it at about $1 billion, Ashishkumar Chauhan told Reuters on Thursday.

A stock market flotation by BSE would join a list of IPOs by Indian companies and could deliver a windfall for its owners including local brokerages, as well as potentially raising funds to help it take on faster growing competitors such as the National Stock Exchange (NSE).

Bank of America Merrill Lynch, JPMorgan, Barclays, UBS and Indian banks Kotak Mahindra Bank and ICICI Bank are among the lead managers of the planned IPO, he said.

Founded in 1875, BSE has long considered an IPO. India's capital markets regulator SEBI in April approved the listing of local stock exchanges, subject to some conditions.

"The process is on. We are targeting a launch in the first half of next year," Chauhan said on the sidelines of an event.

BSE says it is the world's No. 1 exchange in terms of listed members, with about 5,000 companies. But rival NSE, founded in 1993, has eclipsed BSE in trade volumes.

On Thursday, for example, equity and derivatives turnover by value on the NSE was more than five times that of the BSE.

MARKET SHARE

"Success for the BSE IPO would be more emotional for broker members of the exchange, but the fact is BSE is losing market share to NSE," said Paras Adenwala, managing director and principal portfolio manager at Capital Portfolio Advisors in Mumbai.

Frankfurt-based Deutsche Boerse and the Singapore Exchange Ltd each own 5 percent of BSE, whose Sensex index remains India's benchmark stock index alongside the rival NSE's Nifty index.

Multi Commodity Exchange of India Ltd raised Rs 6.6 billion in an IPO earlier this year, becoming the first Indian bourse to list.

BSE's total income rose 7 percent to Rs 5.78 billion in the year through March from 5.38 billion in the previous year. Net profit, however, fell nearly 12 percent to 2.05 billion.

By comparison, NSE had total income of Rs 10.8 billion and net profit of 7.05 billion for the year through March.

Share sales by Indian companies in the first half of this year were down 4 percent from a year earlier to $7.1 billion, according to Thomson Reuters data, but the IPO market is poised to end the year with a flourish.

Bharti Infratel, the tower arm of top mobile phone carrier Bharti Airtel, is seeking to raise as much as $830 million in an IPO next week, while a handful of smaller IPOs are also set to be launched.

Sources have said the government is planning to offload about $1.2 billion worth of shares in state-run miner NMDC Ltd on December 13.

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