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Thursday, July 18, 2024

Marquee Funds Reduce NSE Holdings Amid IPO Uncertainty

Marquee Funds Reduce NSE Holdings Amid IPO Uncertainty

A number of prominent funds have reduced their stakes in the National Stock Exchange (NSE) during the 2023-24 fiscal year. This trend is largely attributed to the lack of clarity regarding the NSE’s Initial Public Offering (IPO) and the finite life cycle of these funds.

Key Stakeholder Movements:

  • Elevation Capital divested its entire holding of 68 lakh shares through SAIF II SE Investments Mauritius, yielding an estimated ₹2,300-3,200 crore based on unlisted market prices.
  • Acacia Banyan Partners also exited its entire position of over 78 lakh shares.

Other entities such as TA Asia Pacific Acquisitions, PI Opportunities Fund, Ontario Inc, and Crown Capital have collectively sold between 13 lakh to 33 lakh shares.

Fund Lifecycle Constraints:
A partner from one of these funds commented, “Our funds have a limited lifespan, necessitating the return of capital after a set period. With no IPO in sight, we had to sell at lower prices. Although we’ve made profits, the Internal Rate of Return (IRR) is modest due to the extended holding period.”

Historical Context:
In 2007, General Atlantic, the NYSE Group, Elevation Capital, and Goldman Sachs each acquired a 5% stake in the NSE. Morgan Stanley, Citigroup, and Actis purchased 3%, 2%, and 1%, respectively. Citigroup, Goldman Sachs, and Norwest Venture Partners fully divested their stakes in FY22.

NSE’s Current Status:
When questioned about the IPO in a recent analyst call, NSE’s Managing Director and CEO, Ashishkumar Chauhan, stated, “We don’t have a comment on the IPO to be made; the situation remains as is.” The NSE has yet to respond to an email inquiry regarding this issue.

Shareholding Dynamics:
The NSE’s shareholding has become more dispersed, with high-net-worth individuals and family offices acquiring shares in recent years. As of March 31, 2024, over 10,000 resident individuals held 13.8% of the total shareholding, up from 4,341 shareholders holding 10.72% the previous year.

Notably, the NSE’s shares have surged by 75% in the past year in the unlisted market.

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