February 07, 2013

who owns bombay stock exchange (bse)?

Here is a story I did, 2-3 months back, in the newspaper I work for, on the shareholders of BSE (Bombay Stock Exchange):

Shapoorji Pallonji & Company picks stake in BSE

BSE saw minor but interesting changes in its shareholders in the period between June 2011 and August this year

Even as its proposed initial public offer has been in the offing for the past few years, BSE, or Bombay Stock Exchange as it was legally known as earlier, its non-broker shareholders are staying put. BSE is the second largest stock exchange in the country after the National Stock Exchange of India.

A FC Research Bureau analysis of BSE's shareholding structure, as available in the exchange's filings with the Registrar of Companies (RoC), revealed that while the list of shareholders had about 1,000 new faces with the number of shareholders climbing from 5,762 as of June 17 last year to 6,797 as of August 31 this year, the largest 23 shareholders who together continue to account for 53.92 per cent stake in the stock exchange, made absolutely no change in their holdings.

This effectively meant the dramatic rise in shareholder numbers took place in the 40-odd per cent holdings by over 6,700 shareholders, a vast majority of whom would be BSE's broker-members who were given shares in the exchange when the trust-run exchange converted itself into a corporate body a few years ago as per the Securities and Exchange Board of India's demutualisation norms for stock exchanges.

Beyond the largest 23 shareholders, the largest and the most interesting change was in the entry of construction major, Shapoorji Pallonji and Company, which took a 0.24 per cent stake in the period between June 2011 and August this year. While the price at which this stake was got and from which it was purchased was not immediately known, it made Shapoorji Pallonji the 24th largest shareholder in BSE.

The company's co-managing director, Cyrus Pallonji Mistry, was picked up recently by Ratan Tata to succeed him as the chairman of Tata Sons. Cyrus' elder brother, Shapoor Pallonji Mistry is the other co-managing director of the company which besides it recent stake purchase in BSE, had investments, at cost, in subsidiaries and non-subsidiary companies to the tune of Rs 1,105 crore at the end of March 2011 (up sharply from previous year's level of Rs 762 crore).

The only other significant change gleaned from RoC filings of BSE was the entry of more than one venture capital firms as stakeholders with an aggregate stake of 0.51 per cent in the stock exchange. One of them was clearly seen to be a Mumbai-based firm, A R Venture Funds Management, which had a 0.14 per cent stake as on August 31.

The largest shareholding in BSE continued to be held jointly by Singapore Exchange and Deutsche Borse who hold 4.92 per cent stake each in BSE. The other large shareholders include Life Insurance Corporation of India and State Bank of India (see table). 

Owning a stock exchange
These 24 largest shareholders owned 54 per cent of BSE

Singapore Exchange; Deutsche Boerse
4.92 each
LIC; State Bank of India 4.84 each
Argonaut Ventures 4.74
Quantum (M); Acacia Banyan Partners; Atticus Mauritius; Caldwell India Holdings 3.87 each
Bajaj Holdings & Inv. 2.90
Blue Star Investments 1.47
MSPL 1.16
Nadathur Estates 1.09
Isheta Realty; Bank of India; Central Bk. of India; Bennett, Coleman & Co; S. Gopalakrishnan 1.02 each
Caldwell Investment Management A/c Urbana Maur 0.76
Aditya Birla Pvt Eq Fund-1 0.51
Bang Equity Broking 0.38
Edelweiss Finance & Inv 0.29
Kotak Securities; Shapoorji Pallonji & Co 0.24 each
Others 46.11

Figures in per cent, represent stakes held in BSE as on August 31 2012

In the previous year-to-year period, a US-based private equity firm, Argonaut Ventures, had increased its stake in BSE from 2.54 per cent at May-end of  2010 to 4.75 per cent in mid-June of 2011. At that time, Argonaut Ventures was a Sebi-registered foreign institutional investor sub-account operating under main FII, US-based George Kaiser Family Foundation.

The other major change in that period involved Dubai Financial Group selling its entire 3.88 per cent stake to a George Soros Group hedge fund, Quantum (Mauritius), in August 2010, for a reported sum of $35 million (about Rs 163 crore at that time).

Some large shareholders in BSE also hold relatively large stakes in
its rival, NSE. LIC and SBI, for instance, were the largest two
shareholders in NSE as of September-end last year with respective
stakes of 10.51 per cent and 10.19 per cent. At that time, on NSE,
Quantum (Mauritius) held 0.86 per cent stake, MSPL along with it
Baldota brothers promoters held 0.94 per cent and S Gopalakrishnan
(then executive co-chairman of Infosys Technolgies) held a 0.38 per
cent stake.

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