NEW DELHI NYSE Group Inc. NYX.N and three other foreign investors have bought a 20 percent stake in India's biggest stock exchange in the latest move in a wave of consolidation sweeping global exchanges.
The operator of the New York Stock Exchange, investment bank Goldman Sachs & Co. (GS.N), private equity firm General Atlantic and SoftBank Asian Infrastructure Fund have each bought a 5 percent stake in the National Stock Exchange (NSE) -- the maximum holding permissible -- in a deal valued at $460 million, the NSE said on Wednesday.
"This alliance marks a significant milestone for NSE in developing a place for itself in the emerging global scenario," NSE Chief Executive Ravi Narain told a news conference, adding that with more Indian firms looking to list overseas, it was natural that foreign exchanges were keen on a presence in India.
The New York Stock Exchange lists 10 firms from India.
NYSE said it would pay $115 million in cash for its stake to a consortium of sellers including ICICI Bank Ltd. (ICBK.BO), IFCI Ltd. (IFCI.BO), IL&FS, Punjab National Bank (PNBK.BO) and General Insurance Corp. of India.
"Our investment complements our global growth strategy," NYSE Chief Executive John Thain said in a statement.
NYSE, which is also in the throes of a $14 billion merger with pan-European bourse operator Euronext ENXT.PA, said it expected to close the purchase in the first quarter of this year, subject to regulatory approvals in India.
Merrill Lynch & Co. was financial adviser to NYSE.
India's central bank has capped total foreign investment in stock exchanges at 49 percent, including direct investment of 26 percent and investments by portfolio investors of 23 percent.
NSE, owned by a set of financial institutions, banks and insurance firms, began operations in June 1994 with trading on the wholesale debt market. It then launched a capital market segment for equities and a futures and options (F&O) segment.
Average daily turnover in its capital market segment in the fiscal year 2005/06 was nearly 62.5 billion rupees ($1.4 billion), while average daily turnover in the F&O segment was nearly 192 billion rupees, its Web site showed.
Its 50-share S&P CNX index .NSEI is the benchmark for derivatives trade in India, and last month hit a record high.
Local newspapers had recently reported that NYSE and Nasdaq Stock Market Inc. (NDAQ.O) were in discussions with NSE's smaller rival, Bombay Stock Exchange (BSE).
The Business Standard reported at the weekend that the BSE had shortlisted the London Stock Exchange (LSE.L), NYSE, Nasdaq, Deutsche Boerse (DB1Gn.DE) and Singapore Exchange (SGX) (SGXL.SI) for a proposed sale of a 26 percent stake.
BSE, founded in 1875 and Asia's oldest bourse, has set itself a deadline of May to reduce the stake held by brokers by offering 26 percent to strategic investors and another 25 percent through an initial public offering.
As the volume of trade soars in the world's largest exchanges, they are scouting for deals that can give them greater scale, creating the deep pools of liquidity traders want and the opportunity to expand into different businesses.
(Additional reporting by Rina Chandran in MUMBAI and Robert MacMillan in NEW YORK)