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Norwest Venture to invest Rs2.5bn in NSE

This article was posted on Jun 4, 2009 and is filed under Market News

NVP acquires eEquity position in India’s Largest Stock Exchange. Norwest Venture Partners (NVP) and IL&FS Securities Services Limited (ISSL) have announced that NVP has signed a definitive agreement to acquire 2.11% equity in the Mumbai-based National Stock Exchange of India Limited (NSE). NVP, a global, multi-stage investment firm, will purchase the shares of NSE for approximately Rs2.5bn in cash from the selling shareholder, ISSL, valuing the Exchange at over Rs120bn.

The valuation accorded to the NSE reflects its standing in global markets. While Exchange valuations have dropped dramatically in all developed markets, the NSE remains well regarded in terms of quality of operations, management and secular growth. This transaction has been approved by the NSE board of directors, and is expected to close within the next week.

It would be recalled that in November 2008, the Ministry of Finance had clarified that Foreign Institutional Investors could hold up to 23% of the equity in an Indian Exchange, even if such Exchange was not listed. The above Notification of Government has cleared the way for enhanced FII interest in the NSE, with NVP being the first FII to take advantage of this investment opportunity.

“The NSE is regarded as one of the best operated exchanges globally, with world-class technology systems, a proven management team, and a wide range of products and industry leading processes that are unrivaled in the industry,” said Promod Haque, Managing Partner, NVP. “We are extremely bullish on the value proposition NSE offers shareholders at a time when India is on the cusp of global influence. We look forward to working with Ravi Narain, MD, and his talented team of executives to help contribute to the growing success of the NSE.”

Added Sohil Chand, Managing Director, NVP India: “The Indian market continues to show great potential and the fundamentals of the Indian economy are strong. NVP is pleased to align itself with the largest stock exchange in India, whose entrenched market position, high liquidity, and national network footprint are incomparable, and future growth opportunities are extremely promising.”

Commenting on the deal Arun Saha, Chairman of ISSL notes, “NVP is an important addition to NSE’s marquee group of pedigreed global financial investors, and we are pleased to welcome the firm as a key stakeholder in NSE. NVP will contribute to building value in NSE as it continues to grow and expand its leadership position in India.”

source: Indiainfoline

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