NYSE to pay $ 115 mln in cash for 5 pc in NSE

New Delhi, Jan 10: New York Stock Exchange (NYSE) today signed a definitive agreement to acquire a five per cent equity position in the National Stock Exchange of India (NSE) for 115 million dollars in cash.

The development has come close on the heels of Reserve Bank of India allowing foreign direct investment of up to 49 per cent in stock exchanges, fixing foreign direct investment cap to 26 per cent.

The Securities and Exchange Board of India (SEBI) has fixed investment limit for single foreign investor at five per cent, beyond which foreign institutional investor or any other investor like foreign stock exchanges could not raise its stake in stock exchanges. ''We feel it is an entry point into the country's largest shares trading market. The NYSE has been watching with interest developments in the financial markets in Asia, in particular in India and China,'' NYSE Group Executive Vice President and CFO Nelson Chai told reporters here.

''The potential opportunities are very exciting,'' he added.

NYSE Group will purchase the shares of NSE from a consortium of selling shareholders, including ICICI Bank, Industrial Finance Corporation of India, IL&FS Trust Company, Punjab National Bank and General Insurance Corporation of India.

The closing of the transaction is expected to take place during the first quarter of 2007, subject to obtaining certain approvals from various government agencies in India. Highlighting on the nature of investment he said, ''This is definitely a strategic investment. We are not going to be involved in the day-to-day operations of NSE, and we are not going to be represented on their board. It would be up to NSE to look at some of the products and services from the NYSE portfolio and strategically adopt or adapt for the Indian market,'' Mr Chai said.

On being asked whether the group is eyeing stakes in any other stock exchange in India or abroad, he said, ''As one of the largest provider of securities listing, trading and market data products and services the NYSE would be open to global strategic alliances.

However, I could not specifically identify any imminent investment in shareholding of any other stock exchanges, anywhere in the world.'' NYSE Group Chief Executive Officer John A Thain showed confidence that the entities can work together to create value for shareholders and identify new opportunities in listings, trading and product development.

This alliance marks a significant milestone for NSE in developing a place for itself in the emerging global scenario, the NSE Managing Director and Chief Executive Officer Ravi Narain said.

The NYSE, subsidiary of NYSE Group, lists 10 companies from India whose total global market capitalisation is approximately 76 billion dollars.

Merrill Lynch&Co acted as financial advisor to NYSE Group on the transaction.

The group operates two securities exchanges -- the New York Stock Exchange LLC (NYSE) and NYSE Arca Inc (formerly known as the Pacific Exchange).

In 2006, on an average trading day, 2.3 billion shares, valued at 86.8 billion dollars, were traded on both the exchanges.

UNI

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