• Group of nine shareholders with 19.6% stake oppose proposals
  • NSE said it has discussed plan with regulator, shareholders

The National Stock of Exchange of India has submitted a plan to the market regulator to separate its core and non-core businesses before an initial public offering, a proposal that’s been opposed by some of its shareholders.

The exchange is seeking approval to allow a listing on its bourse, Vice Chairman Ravi Narain said by e-mail on Friday. Rules issued by the market regulator, the Securities & Exchange Board of India, in November for exchange IPOs do not permit self-listing.

A group of nine investors in the NSE, including Tiger Global Five Holding and Norwest Venture Partners X FII - Mauritius, wrote to the bourse Jan. 13 asking it to not proceed with the restructuring plan as it would delay a listing, according to Norwest Venture’s Managing Director Sohil Chand. The investors own a combined 19.6 percent stake in the exchange, he said.

“The NSE should not waste Sebi’s time discussing a plan that does not have adequate support among shareholders,” Chand, whose firm owns 2.11 percent of the exchange, said. “If the NSE fails to take cognizance of its shareholders views, we will be left with no option but to call for an extraordinary general meeting.”

The NSE and its 140-year-old competitor, now renamed BSE Ltd., haven’t yet laid out plans to sell shares to the public. Policy makers have long viewed the bourses as public utilities to promote an equity culture in the world’s second-most populous nation rather than as a business.

“The key issue is that of securing nod for self-listing,” Narain said. “Virtually every exchange globally that has gone down the path to list has chosen self-listing.”

The NSE has explored the “regulatory feasibility” for the restructuring plan, and has discussed it with its shareholders in the past few months, Spokesman Arindam Saha said in a statement.

The NSE handles about twice the volume of the BSE in the cash segment and controls about 80 percent of India’s $45 billion a day derivatives market. If the two exchanges were to sell shares, they could be valued at a combined $5.8 billion, 41 percent more than the valuation reflected in private, negotiated deals, according to estimates provided by SAIF Partners last July.

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