BSE public issue: existing investors may divest through offer for sale

BSE is likely to kick start its initial public offering in another 4-5 months with the filing of the draft red herring prospectus (DRHP). The stock exchange had received SEBI’s approval for listing on Saturday.

Speaking to BusinessLine , Ashishkumar Chauhan, MD & CEO, BSE, said, the IPO will be in the form of an offer for sale by existing shareholders. He, however, did not comment on the issue size or disclose the names of the existing shareholders who may exit through the OFS.

According to BSE’s shareholding pattern for December 2015, public shareholders held 51.01 per cent while the remaining 48.99 per cent was held by trading members and associates of trading members. Prominent shareholders of BSE include LIC, Deutsche Boerse AG, Singapore Exchange, Caldwell India Holdings, Acacia Banyan Partners besides Punjab & Sind Bank, among others.

The IPO could attract new foreign players as the Centre has recently announced its intent to allow higher FDI. IPOs using the offer-for-sale method are used by existing shareholders to either partly or totally exit the investee company.

On November 30, 2015, the SEBI board allowed listing of stock exchanges. This was, however, subject to maintaining 51 per cent public shareholding at all times. To ensure that holding of trading members/ associates/ agents does not exceed 49 per cent, it directed that a mechanism be put in place providing for approval of the listed stock exchange as and when holding of trading members/ associates/agents reaches a limit of 45 per cent.

Applicants were required to make a self-declaration of being fit and proper at the time application during the bourse’s IPO/OFS.

Depositories were required to monitor the shareholding threshold of 2 per cent for individuals (for stake above 2 per cent SEBI approval is required), 5 per cent for foreign entities and 15 per cent for domestic institutions while classifying stock exchanges as infrastructure companies.

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