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Elevation Capital to sell stake worth Dollar 125 million in NSE

10 Nov , 2022   By : Monika Singh

Elevation Capital to sell stake worth Dollar 125 million in NSE

Institutional shareholders continue to trim their stake in the National Stock Exchange of India (NSE) amid the delay in the bourse’s initial public offering (IPO).

Elevation Capital, formerly SAIF Partners, is in the process of offloading stake worth $125 million (about Rs 1,000 crore) in the exchange, said people in the know. The private equity firm had reduced its stake to 2.14% in FY22 from 3.21% in the previous year. After the sale, Elevation will continue to hold shares worth around Rs 2,000 crore in the exchange.

General Atlantic, the NYSE Group, Elevation Capital and Goldman Sachs were among the first group of foreign investors to acquire a 5% stake each in the NSE in 2007. In the same year, Morgan Stanley, Citigroup and Actis purchased 3%, 2% and 1%, respectively, in the exchange.

Citigroup, Goldman Sachs and Norwest Venture Partners sold their entire stake in FY22. These three had a stake of 1.64%, 2% and about 1% at the end of FY21.

“We invested in 2007 and waited a long time for the IPO. There was a need to return money to our LPs,” said one of the private equity shareholders.

The NSE on Monday held a conference call with investors and analysts, but did not share any update on its IPO. The exchange said it would move out of some of its non-core businesses and was working on strengthening its IT systems. It plans to add bond index futures, gold trading and electricity F&O into its product suite.  

IIFL Asset Management, another institutional investor, sold 3.7 million shares in the last two quarters, reducing its stake in the exchange to 3.94% in the three months to September, from 4.69% at the end of March 31, 2022. The fund would have earned anywhere between Rs 900 crore and Rs 1,300 crore from the transactions based on prevailing prices in the unlisted market.

IIFL AMC had reportedly invested $60 million in the NSE through IIFL Special Opportunities Fund in 2017, followed by another $100 million in February 2018. The fund is a category II alternative investment fund and aims to provide individual investors the opportunity to participate primarily in IPO and pre-IPO events as institutional investors.

“We are early investors in NSE and remain optimistic about the strength of the company. Buying and selling in our various funds are driven by the maturity and liquidity needs of the funds,” said an IIFL AMC spokesperson in an email response.

The share price of the exchange in the unlisted market has declined to below Rs 3,000 from Rs 3,500 in February this year, said people in the know. Share prices had rallied 250% to Rs 3,500-3600 in the unlisted market between 2019 and 2021 amid rising profitability and hopes of an IPO.

An email sent to the NSE regarding its IPO plans and dip in share prices did not get a response.

NSE’s shareholding is a lot more diffused today. Shareholder numbers have grown from under 100 to over 2,600 in the past six years, with several high net worth individuals and family offices lapping up the shares. The percentage of individuals’ holding has risen to 10.4% as of March 31, 2022, from 1.16% six years ago.

NSE shareholders have been pushing the exchange to go public since 2015. The exchange had filed for its IPO in December 2016, but was asked to withdraw its offer documents pending investigations into the co-location scam. In FY21, the exchange approached the market regulator for a nod to its IPO plan, which did not elicit a response. The co-location scam and issues pertaining to former bosses Chitra Ramkrishna and Ravi Narain as well as a mysterious yogi have also put a spanner in its IPO plans.

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