BSE Ltd, India’s second-biggest stock exchange filed for an initial public offering (IPO) in order to list its shares on larger rival National Stock Exchange (NSE).
About IPO :
Initial public offering(IPO) or stock market launch is a type of public offering in which shares of a company usually are sold to institutional investors that in turn, sell to the general public, on a securities exchange.
- Through this process, aprivately held company transforms into a public company. Initial public offerings are mostly used by companies to raise the expansion of capital, possibly to monetize the investments of early private investors, and to become publicly traded enterprises. A company selling shares is never required to repay the capital to its public investors.
- After the IPO, when shares trade freely in the open market, money passes between public investors. Although IPO offers many advantages, there are also significant disadvantages, chief among these are the costs associated with the process and the requirement to disclose certain information that could prove helpful to competitors. The IPO process is colloquially known as going public.
- Details of the proposed offering are disclosed to potential purchasers in the form of a lengthy document known as aprospectus. Most companies undertake an IPO with the assistance of an investment banking firm acting in the capacity of an underwriter.
- Underwriters provide several services, including help with correctly assessing the value of shares (share price) and establishing a public market for shares. Alternative methods such as the dutch auction have also been explored.
- In terms of size and public participation, the most notable example of this method is the Google IPO. China has recently emerged as a major IPO market, with several of the largest IPOs taking place in that country.
BSE filed draft papers with markets regulator Sebi to raise an estimated Rs 1,200 crore to Rs 1,300 crore through initial public offering (IPO).
- BSE will be the first Indian stock exchange and the second bourse in the country to be listed. In 2012, Multi Commodities Exchange (MCX) became the first bourse in the country to get listed. NSE, the largest stock exchange in India by turnover, is also gearing up for listing.
- BSE, formerly known as the Bombay Stock Exchange, boasts the most listings in the world with more than 5,900 listed companies but it has been dwarfed by rival NSE in trading volumes, especially since the introduction of derivatives that have increased liquidity in large caps.
- The exchange’s draft prospectus is that its investors are selling 29.96 million shares in the IPO, a roughly 27.9 per cent stake.
- Of the 107.35 million shares in BSE, trading members hold about 52.3 million shares, or 48.7 per cent. The rest is held by Deutsche Boerse AG, Singapore Exchange and a group of foreign portfolio investors, insurance companies and individuals.
- Presently, Multi Commodity Exchange of India is the only listed bourse in India. BSE’s closest competitor NSE also plans to file for listing next year.
About BSE :
The Bombay Stock Exchange (BSE) is an Indian stock exchange located at Dalal Street, Kala Ghoda, Mumbai, Maharashtra, India. Established in 1875, the BSE is Asia’s first stock exchange.
- It claims to be the world’s fastest stock exchange, with a median trade speed of 6 microseconds.
- The BSE is the world’s 11th largest stock exchange with an overall market capitalization of $1.7 trillion. More than 5500 companies are publicly listed on the BSE.