Norwest acquires NSE stake for Rs 250 crore

Promod Haque’s Norwest Venture Partners (NVP) has picked up a minority stake in in the Mumbai-based National Stock Exchange of India Limited (NSE). Norwest acquired the stake from one of NSE promoter companies IL&FS Securities Services Limited (ISSL). The global, multi-stage investment firm has entered a definitive agreement with ISSL to acquire the latter’s 2.11% equity.

NVP has agreed to purchase the shares of NSE for approximately Rs 250 crore in cash. This deal values National Stock Exchange (NSE) as an entity at over Rs 12,000 crore. This valuation reflects NSE’s higher standing in global markets where 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.

“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 unrivalled in the industry,” said Promod Haque, managing partner, NVP.

Earlier in November 2008, the Ministry of Finance had clarified that Foreign Institutional Investors (FIIs) 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.

According to Sohil Chand, managing director, NVP India, “The Indian market continues to show great potential and the fundamentals of the Indian economy are strong. We are 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.”

Norwest manages more than $2.5 billion in capital out of its offices in Palo Alto, California, Mumbai and Bangalore, India and Herzelia, Israel. The investment firm makes early to late stage venture and growth equity investments in US and global companies across a wide range of sectors including: information technology, business services, financial services, consumer and infrastructure.