Indian bourse operator NSE aims for listing in second half of 2018

Vikram Limaye, the new chief executive of National Stock Exchange, the delayed time frame was dictated by the need to address a regulatory probe into whether NSE employees had provided unfair trading access to select brokers. (Reuters)
Updated 29 September 2017
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Indian bourse operator NSE aims for listing in second half of 2018

MUMBAI: The new chief executive of India’s National Stock Exchange (NSE) said he does not expect the bourse’s eagerly awaited listing to take place until the second half of 2018.
The exchange had originally planned to go public this year, in what could be one of India’s biggest ever IPOs.
Vikram Limaye, who took the helm in July after heading infrastructure lender IDFC, said the delayed time frame was dictated by the need to address a regulatory probe into whether NSE employees had provided unfair trading access to select brokers.
NSE has applied to the Securities and Exchange Board of India (SEBI), the market regulator, to settle the issue, which has cast a shadow over the initial public offering that some market participants have said could raise up to $1.5 billion.
Limaye, in an interview with Reuters, said the probe was ongoing and the exchange was awaiting a decision from SEBI on its settlement offer but had yet to hear from the regulator.
At the same time, consultant EY, one of the agencies appointed to look into the case, could submit its report within two weeks, he said. That report would then be presented to the NSE board and to SEBI, which will decide on the final action.
NSE will re-submit its application for an IPO after it has clarity from SEBI.
“I would certainly like to do the IPO as soon as possible but it’s not up to me,” Limaye said. A listing by March would be “very difficult”, and a more realistic time frame would be the second half of next year, he said.
NSE had initially applied for an IPO in December 2016, intending to list by the first half of this year. NSE Chairman Ashok Chawla, in interviews with local media earlier this year, pushed back the deadline to December and later until March.
The repeated delays reflect the difficulties NSE has faced in getting SEBI approval after the exchange disclosed that some brokers had been provided early access to its co-location servers. The servers are placed at the site of exchanges to speed up algorithmic trading.
The exchange appointed Deloitte to look into the case, and the consultant had discovered some brokers had exploited technical loopholes in the NSE’s trading systems to gain first-access to the servers.
However, Deloitte was unable to prove whether NSE employees had colluded with brokers to provide early access.
Sources had told Reuters the NSE’s disclosure contributed to the departure of former CEO Chitra Ramkrishna. Other executives at NSE have since departed, including co-founder Ravi Narain
NSE’s smaller rival BSE listed in February, and has seen its stock gain more than a fifth as equity markets have hit record highs amid strong retail inflows and an IPO boom.
Limaye, 51, said he did not expect the delay in the IPO timeline to affect valuations as their business and market share remained strong.
Instead, he said it was important the exchange resolve the probe and alter an outside perception that NSE is insular and opaque.
As part of his priorities, Limaye, a former accountant and banker who has worked at firms like Ernst & Young and Citibank, said he was making it a priority to open communication with stakeholders and improve corporate governance standards.
“We have obviously looked at which areas need to be reviewed, where controls need to be strengthened,” Limaye said.
“I’m building all the bridges that are required in order to make sure that stakeholder relationships are back to where they need to be.”


Slack primed as latest unicorn to make market debut

Updated 19 June 2019
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Slack primed as latest unicorn to make market debut

  • Slack is a cloud-based software company that markets online tools for information sharing and workflow management
  • Current customers include Nordstrom, Ford and HSBC and the company has more than 95,000 paid customers overall

NEW YORK: The 2019 parade of big new Wall Street entrants continues this week with the debut of Slack Technologies, underscoring investor hunger for new companies in spite of some high-profile stumbles.
Nearly halfway through the year, US markets are on track for one of the biggest IPO seasons ever in terms of money raised following a stream of offerings from former “unicorns,” private companies worth more than $1 billion.
Yet two of this year’s biggest names — Uber and Lyft — currently trade below their IPO price, along with Snapchat, which has lagged its initial price for most of the time since it went public in March 2017.
Still, there have also been plenty of prominent companies that have risen since their initial public offerings, including jeans company Levi’s, Tradeweb Markets, which builds electronic marketplaces, Zoom Video Communications, and mobile application and software system Pinterest.
The most dramatic jump has been in food company Beyond Meat, which now trades at more than six-fold its entering price.
“The public has a huge interest” in new companies, said JJ Kinahan, chief market strategist at TD Ameritrade, adding that the mixed performance of the 2019 ex-unicorn class is comparable to that of the broader market.
“There aren’t a lot of other choices besides IPOs for investors seeking growth,” said Gregori Volokhine, president of Meeschaert Financial Services, who attributes the rush of funds in part to central bank policies promoting liquidity.
“There’s an excess of underinvested funds worldwide,” he said.
In terms of sheer volume, the number of IPOs in 2019 so far — 93 — is roughly equal to last year’s figure, according to Dealogic.
But the funds raised, $34.5 billion, stand 13.6 percent above last year’s sum and the highest for the comparable period since 2000, according to Dealogic data.

Direct listing
A cloud-based software company that markets online tools for information sharing and workflow management, San Francisco-based Slack parts ways from the other big companies this year by opting for a direct listing instead of an IPO.
This approach, which was also employed by Spotify last year, cuts down on fees to investment bankers in IPOs. Although existing shares can be sold, a direct listing does not issue new shares, averting share dilution but also forgoing the new funds raised in an IPO.
The process can also be riskier in terms of share price volatility compared with an IPO, where underwriters line up investors in advance. In a direct listing, shares are exposed more directly to the open market.
Slack chief executive and co-founder Stewart Butterfield described the company’s technologies as a “brand new category of software” that replaces email in a company.
Current customers include Nordstrom, Ford and HSBC and the company has more than 95,000 paid customers overall.
“It turns email to messages and organizes them into team, project and topic based channels instead of individual in-boxes,” Butterfield said in a June 10 earnings conference call.
“It’s a team-first approach to communication, in contrast to email’s individual first approach. It creates a rich, searchable, permanent body of information that’s widely available across an organization, even for people who just joined the team.”
 

Unprofitable three years
The company, which is expected to be valued at around $17 billion when it enters the market on Thursday, reported revenues of $134.8 million in the quarter ending April 30, up 66.7 percent from the year-ago period.
But Slack, which has been unprofitable the last three years, reported a $33.3 million loss during the period, 34 percent more than last year’s loss.
Of course, many unprofitable companies have gone public and done well in markets for years. Yet the heavy losses and murky profit outlook at Uber and Lyft have been seen as factors in their lackluster performance since going public.
But investors remain keen on growth stories following the success of Amazon, Facebook and other tech giants that have emerged in recent decades.
A key beneficiary of this desire has been Beyond Meat, which has multiplied in value many times since going public May 3 at $25 and currently is priced at $168.92. The company has been seen as a main beneficiary of the growing alternative protein market, which some analysts think could top $100 billion in the coming decade or so.
Kinahan said in general investors have wised up after the early 2000s Internet bubble but that “it’s just unnatural” for stocks like Beyond Meat to move in an unbroken straight line upwards.
“There’s a healthy bit of skepticism in the market,” he said. “However, certain companies have maybe gotten a little ahead of themselves.”