(Disclosure:I am market making in Ratnakar Bank)
Analysts expect the RBL Bank IPO—the first primary market offering by a bank since Punjab and Sind Bank raised Rs.480 crore in 2010—to draw a strong response.
“We expect the Ratnakar Bank IPO to be subscribed by 20-30 times. Also, given the bank’s potential to capture a large market share, the investors are likely to get an annual market return of 20-25%,” said Vikas Khemani, chief executive for wholesale capital markets at Edelweiss Financial Services Ltd.
He added that RBL Bank can gain immensely at a time when public sector banks have been losing market share to private banks—a trend that is expected to accelerate with state-owned banks starved of adequate capital for growth. “This will be a litmus test for the bank because an IPO is always the lead indicator of things to come. How the IPO goes will be critical to subsequent issues and also what perception the bank develops in the minds of both retail and institutional investors,” said Robin Roy, associate director at audit and consultancy firm PricewaterhouseCoopers.
Apart from raising fresh funds, the issue will also help some of its existing investors exit. Over the last three years, global and local private equity and development funds have invested over Rs.1,400 crore in the bank in three tranches.
As recently as 10 April, RBL raised Rs.328 crore by selling fresh shares to UK government-owned development institution CDC Group Plc and Asia Capital and Advisors Pte Ltd along with existing shareholders World Bank-backed International Finance Corp. and Gaja Capital. Housing Development Finance Corp. Ltd, Norwest Venture Partners, Samara Capital, Beacon Capital, Faering Capital, TVS Shriram, Cartica Capital, Ascent Capital, Aditya Birla Private Equity, IDFC’s Spice Fund and ICICI’s Emerging India Fund are also shareholders in the bank.-from Mint
(Disclosure:I am market making in the shares of BSE)
The government should allow leading global bourses to hold up to 49% stake in Indian stock exchanges to enhance the competitiveness of domestic capital markets, BSE has said.
The current policy permits foreign bourses to own a maximum of 5% stake in Indian exchanges. “The current policy on ownership of stock exchanges may be amended to allow for an investment stake of at least 15% (or preferably even 26-49%) for foreign exchanges of international repute, in line with the regulations for Indian exchanges,” BSE said.
The recommendation has been made by BSE in a document to the ministry of finance ahead of the budget in July. According to the leading stock exchange, while the current policy does not “preclude a strategic partnership between an Indian and a foreign exchange, the 5% cap does make such a partnership difficult”.
It added: “Without the potential for a meaningful investment stake of at least 15% (or preferably even 26-49%) potential foreign partners are reluctant to engage fully because there is inadequate ‘skin in the game.’” BSE has said the move will allow domestic stock exchanges the flexibility to form deeper partnerships with global bourses, enhance global competitiveness, help attract more foreign funds, facilitate and accelerate adoption of best-in- class technology. “The foreign exchanges can only afford to invest their time and resources if their contribution is rewarded commensurately,” BSE said, adding that a larger ownership stake is one way to ensure their engagement.-from Mint
Currently, both Deutsche Bourse AG and Singapore Exchange Ltd. own around 4.92% each in BSE
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Chart:Market conditions resemble Jan 2007
Source:Economist
