Global banks Morgan Stanley and Citigroup and private equity firm Actis today collectively bought a six per cent stake in the National Stock Exchange (NSE) for an undisclosed sum.
This takes the combined foreign direct investment in the country's premier stock exchange to 26 per cent, the limit for foreign ownership in domestic stock exchanges.
Morgan Stanley will buy 3 per cent in the stock exchange, while Citigroup and Actis will acquire 2 and 1 per cent, respectively, according to a press release.
Domestic financial institutions IDBI (2 per cent), State Bank of India (1.5 per cent), SBI Capital Markets (0.50 per cent), Corporation Bank (0.265 per cent), Union Bank of India (0.125 per cent), Bank of Baroda (0.89 per cent), Canara Bank (0.385 per cent) and Oriental Bank of Commerce (0.335 per cent) are selling their stakes to the three new investors.
Early this year, the parent company of the New York Stock Exchange (NYSE) and three global financial institutions, General Atlantic, Goldman Sachs and Softbank Asian Infrastructure Fund, bought 20 per cent in NSE, valuing the exchange at $2.3 billion. NYSE had paid $115 million for its 5 per cent stake.
Morgan Stanley, Citigroup and Actis are likely to have shelled out around $138 million on the basis of this valuation. Top NSE officials were not available for comment.
The NYSE Group, General Atlantic, Goldman Sachs and Softbank Asian Infrastructure Fund bought into NSE after they signed agreements with five Indian institutions -- IFCI, IL&FS, ICICI, PNB and GIC -- to acquire 5 per cent each from these institutions.
According to the government regulations, a single entity cannot buy more than 5 per cent stake in domestic stock exchanges. Recently, Germany's Deutsche Boerse and Singapore Exchange (SGX) bought five per cent stakes each in Bombay Stock Exchange (BSE) for just over $ 42 million.