Norwest Venture Partners has agreed to acquire a 2.11% equity stake in Mumbai-based National Stock Exchange of India Ltd. from IL&FS Securities Services Ltd. The deal is valued at Rs 250 Crores ($53.1m).
Norwest Venture Partners (NVP) and IL&FS Securities Services Limited (ISSL) have today announced that NVP has signed a definitive agreement to acquire 2.11% equity in the Mumbai-based National Stock Exchange of India Limited (NSE). NVP, a global, multi-stage investment firm, will purchase the shares of NSE for approximately Rs 250 Crores in cash from the selling shareholder, ISSL, valuing the Exchange at over Rs 12,000 Crores.
The valuation accorded to the NSE reflects its standing in global markets. While Exchange valuations have dropped dramatically in all developed markets, the NSE remains well regarded in terms of quality of operations, management and secular growth. This transaction has been approved by the NSE board of directors, and is expected to close within the next week.
It would be recalled that in November 2008, the Ministry of Finance had clarified that Foreign Institutional Investors could hold up to 23% of the equity in an Indian Exchange, even if such Exchange was not listed. The above Notification of Government has cleared the way for enhanced FII interest in the NSE, with NVP being the first FII to take advantage of this investment opportunity.
“The NSE is regarded as one of the best operated exchanges globally, with world-class technology systems, a proven management team, and a wide range of products and industry leading processes that are unrivaled in the industry,” said Promod Haque, Managing Partner, NVP. “We are extremely bullish on the value proposition NSE offers shareholders at a time when India is on the cusp of global influence. We look forward to working with Ravi Narain, MD, and his talented team of executives to help contribute to the growing success of the NSE.”
Added Sohil Chand, Managing Director, NVP India: “The Indian market continues to show great potential and the fundamentals of the Indian economy are strong. NVP is pleased to align itself with the largest stock exchange in India, whose entrenched market position, high liquidity, and national network footprint are incomparable, and future growth opportunities are extremely promising.”
Commenting on the deal Arun Saha, Chairman of ISSL notes, “NVP is an important addition to NSE’s marquee group of pedigreed global financial investors, and we are pleased to welcome the firm as a key stakeholder in NSE. NVP will contribute to building value in NSE as it continues to grow and expand its leadership position in India.”
About National Stock Exchange of India Limited
National Stock Exchange (NSE), established in the mid 1990s as a demutualised electronic exchange by leading Indian financial institutions offers trading, clearing and settlement services in a range of products covering equity, debt and equity derivatives. It is India ‘s largest exchange and ranks third globally by number of trades in the equities market. NSE provides a modern, fully automated screen-based trading system with nearly 40,000 trading terminals giving it extensive reach. NSE has played an important role in helping reform the Indian securities market and in bringing about transparency, efficiency and market integrity.
NSE introduced trading in equity derivative products in 2000-01 and in this short span of time has become the largest exchange in single stock futures and ranks fourth in index futures globally. Its flagship index, the NIFTY 50, is used extensively by investors in India and around the world to take exposure to the Indian equities market. For more information about NSE, please visit: www.nseindia.com.
About IL&FS Securities Services Ltd., (ISSL)
IL&FS Securities Services Ltd., (ISSL) is a wholly owned subsidiary of Infrastructure Leasing and Financial Services Ltd., (IL&FS). The current business portfolio consists of depository services, custodian services, providing professional clearing services, on the cash and derivative segments of the exchanges, professional clearing services on the commodities exchanges.
About Norwest Venture Partners
Norwest Venture Partners (NVP) is a global, multi-stage investment firm that manages more than $2.5 billion in capital out of its offices in Palo Alto, California, Mumbai and Bangalore, India and Herzelia, Israel. NVP makes early to late stage venture and growth equity investments in U.S. and global companies across a wide range of sectors including: information technology, business services, financial services, consumer and infrastructure.
NVP has funded over 450 companies since inception. Recent investments and transactions include Airespace (acquired by Cisco Systems), deCarta, KACE, LifeSize, mBlox, OnMobile, Open-Silicon (acquired by Unicorn Investment Bank), Persistent Systems, Qumranet (acquired by Red Hat), Rackspace (NYSE:RAX), SideStep (acquired by Kayak), Spinnaker Networks (acquired by Network Appliance), Sulekha, Winphoria Networks (acquired by Motorola) Yatra, and Yipes (acquired by Reliance/Flag Telecom). NVP has also funded such market leaders as Actel Corporation, Cerent (acquired by Cisco Systems), Documentum, Extreme Networks, Forte Software (acquired by Sun Microsystems), PeopleSoft, Siara Systems (acquired by Redback Networks) and Tivoli Systems (acquired by IBM). For more information, please visit www.nvp.com.