“Can you imagine that one single stock like NSE, with the amount of foreign holding that it allows, can draw close to the amount we talked about in the entire deposit mobilisation? Maybe $40 billion to $50 billion of FPI investments can come in purely because of one stock of NSE,” he said.
Paranjape said SBI listing could bring in long-term money from sovereign funds and other global institutions at a time when India is looking to strengthen foreign inflows.
The IPO would also unlock capital held by institutions such as SBI and LIC, allowing them to redeploy those resources into creating the next generation of Indian financial institutions.
NSE IPO consists of up to 14.89 crore equity shares with a face value of ₹1 each, accounting for nearly 6% of NSE’s paid-up equity capital. The issue is entirely an offer-for-sale (OFS), with the exchange itself not raising any fresh capital.
All proceeds from the issue will accrue to the existing shareholders selling their stakes. The price band for the offering has not been disclosed yet.
These are edited excerpts from the interview.Q: What is a palatable valuation which draws maximum interest?Paranjape: You are well aware that I am an investor, both in a personal capacity and I am also on the board of SBI, so I don’t think I am going to get into any of the valuation. That’s more for the bankers, the markets and analysts to decide.
Q: NSE sits at the centre of the financialisation theme. How do you see this event?Paranjape: I would add two things to this. I was just watching your earlier panel, where you were talking about how much we expect to mobilise because of the liberalisation on interest rates and the foreign inflows on deposits.
Can you imagine that one single stock like NSE, with the amount of foreign holding that it allows, can draw close to the amount we talked about in the entire deposit mobilisation? Maybe $40 billion to $50 billion of FPI investments can come in purely because of one stock of NSE.
As a country, we should feel very proud that at a time when we need foreign reserves and inflows, we are able to offer the world a marquee stock that allows everyone to participate in a phenomenal economy and which then gets in much more flows into the country.
The second thing is that Indian institutions were built by the other institutions such as SBI, LIC and IDBI. They invested in upcoming companies. Their capital gets unlocked and they can put that money back to similar use. We can create the next NSE, the next SBI or the next LIC with the same capital that gets unlocked.
These are two very significant developments, and at a time when we are looking for more foreign inflows, we couldn’t have asked for a better offering in the market.
Q: Does an IPO of this size take liquidity away from other capital market plays?Paranjape: I would say that a stock like NSE, which will attract a lot of foreign investors, is likely to bring in sovereign funds and other long-term pools of capital.
It’s not going to take away liquidity. In fact, it will add to it. For those who have recently felt that India has lost some flavour, something like this could bring capital allocations back towards India.
Q: Will the exchange business continue to evolve with new products?Paranjape: Absolutely. I feel very confident that with the exchanges we have, where there is excellent participation, great surveillance and risk controls, we will see more long-term products.
I also expect institutional participation to grow. This is a great long-term opportunity. India has two vibrant exchanges and both are doing very well. This event is going to add to the overall market capitalisation and create more opportunities for investors in Indian markets.
Q: Does the derivatives segment remain a regulatory concern?Paranjape: We have seen some very welcome steps from the regulators over the last couple of months. We recently hosted the SEBI chairperson at a seminar at the IMC, and the message was clear. They have done what they thought was required in terms of ensuring that there is a little bit more control and a little bit more discipline in this market, and I don’t think they want to really regulate flows anymore.
They would like the market to decide where they want to invest, and they would like the market to take those opportunities. So, I don’t think we are going to see much more of what we saw maybe a year and a half ago, and we have seen those changes already take place. I am not expecting too much more in terms of stricter regulations or dampening of these markets going forward.
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