Trades not settled through the clearing corporation or clearing house of an exchange are classified as off-market trades. The route is frequently used by investors who wish to offload their holdings in unlisted stocks and the payment is settled privately between the parties.
According to another person, the off-market transactions are being done close to Rs 385, the price currently quoting in the grey market. “The demand raises the chances of oversubscription for the IPO,” he said.
During the offer for sale in August, investors had tendered close to 29.95 million shares or 27.43 per cent stake in the exchange. This means close to 75 million shares are currently untendered and held by investors.
BSE declined comment for this report. Its shares have gained about 35 per cent in the grey market after the exchange told the Securities and Exchange Board of India (Sebi) in a letter dated January 22 that it was fully compliant with regulations and ready to list for an IPO. The current price is slightly higher than the Rs 375-380 a share that billionaire investor George Soros had paid in August 2011 for a four per cent stake in BSE, through his Quantum hedge fund.
Brokers, however, believe the grey market might not be the right gauge to value the shares, as it is an illiquid one, with not many participants. They expect shares to be priced between Rs 500 and Rs 650 each for the IPO, higher than the Rs 450-odd estimated by investment bankers.
A price of Rs 450 would value the exchange at Rs 4,900 crore, while one of Rs 650 would imply close to Rs 7,000 crore.
Brokers say the exchange deserves a rich valuation, with the 140-year pedigree and presence across segments, including currency, insurance and mutual funds.
The investment bankers appointed by BSE are yet to meet investors and the price remains in the realm of speculation. Bankers will decide on a price band after they embark on road shows, once the draft prospectus is approved by Sebi.
BSE’s consolidated net profit for 2015-16 declined 38 per cent to Rs 96.7 crore, from Rs 155.5 crore the previous year. The exchange has seen a dip in cash market volumes, its mainstay, and has a market share less than 20 per cent of rival National Stock Exchange of India. Volumes in the derivatives segment have dived to almost nil, after the exchange trimmed its incentive structure for market makers last year.
Sandip Ginodia , Director
ALTIUS INVESTECH PVT LTD
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