The largest exchange in India, National Stock Exchange (NSE) has an ambition—to launch its initial public offering (IPO) during this fiscal year. And there are many who are hoping to make money out of it. Old investors such as Norwest Venture Partners—who now own only a 1.58% stake—originally acquired a 2.11% stake in the company at a valuation of Rs 2,650 ($36) per share in 2009. And Johnny-come-latelys like NewQuest Capital Partners who entered the company in 2015 as old investors were losing patience.Among this latter group, one man stands out—Prashasta Seth, CEO at IIFL Asset Management. Seth has raised the largest pre-IPO fund in India. A whopping Rs 8,746 crore ($1.1 billion). And he’s betting big on NSE’s IPO, to the tune of nearly Rs 1,400 crore ($192 million).
IIFL started buying into NSE, albeit slowly since 2017. It currently owns 2.71% through its IIFL Special Opportunities Fund and each of its series, and once more in the last few months, it has increased its investment in NSE. By the end of December 2018, Seth expects his fund will hold nearly 3.20% in the company, though that will be the extent of its appetite.
While Seth has deployed Rs 4,797 crore ($657 million) from the fund across companies such as Bikaji Foods, Indian Energy Exchange, and Nazara Technologies among others, he’s parked nearly 16% of IIFL’s capital in NSE.
Sitting in a corner chair of IIFL’s headquarters in Kamala Mills, Mumbai, Seth is optimistic about his NSE bet. He says that he sees a huge potential upside to his investment. “Our fund has a lifeline of 3.5 years, and we think that all the issues that NSE is facing will be resolved in the next 6-12 months,” he says, explaining his rationale. Seth believes that IIFL’s investments will see a 30% upside from the levels at which they were bought and that the current market price factors in the delay in IPO.
While Seth declined to confirm the exact prices at which he has bought into NSE, back of the hand calculations based on shareholding data available with NSE and IIFL’s investment amounts indicate that, on an average, they have been acquiring shares at around Rs 830 ($11.37) apiece.
In addition, IIFL has invested Rs 1,000 crore ($137 million) in NSE-promoted NSDL e-Governance Infrastructure Ltd, a technology provider platform which works with government agencies. The fund has also invested little over Rs 150 crore ($20.5 million) in NSDL, a depository firm where, once again, NSE is a promoter in the firm. IIFL’s investment banking arm is one of the merchant bankers for NSE’s IPO.
Clearly, Seth is bullish on NSE’s prospects, both in terms of its IPO and otherwise.
