Published On: Tue, May 4th, 2010

Temasek to Buy 5 Percent of National Stock Exchange of India

Temasek Holdings Pte bought a 5 percent stake in the National Stock Exchange of India Ltd. from NYSE Euronext to tap the country’s economic expansion.

NYSE Euronext sold the stake in the Mumbai-based bourse for $175 million, the largest U.S. stock exchange owner by total market share said in a statement today. The Singapore state- owned investment company announced its purchase in an e-mailed statement late yesterday.

This is Temasek’s second investment in India in less than a month. The company, which manages about S$172 billion ($126 billion) of holdings, agreed in April to buy a stake for $200 million in GMR Energy Ltd. to take advantage of growing demand for power in the world’s second-fastest growing major economy.

“We see our investment in NSE as a good proxy to India’s economic growth and the development of its capital markets,” Manish Kejriwal, senior managing director at Temasek, said in a statement. “Temasek continues to focus on investments in India and believes in its long-term potential.”

Richard Adamonis, a spokesman for NYSE Euronext, said by phone the New York-based firm sold the stake to Temasek. NYSE Euronext will use the proceeds to repay debt, the New York-based company said in its first-quarter earnings statement today.

India’s Sensitive Index has risen 43 percent in the past year, bolstering overseas investors’ appetites for the nation’s stocks, and investment banking fees are set to rise in 2010 as the government plans to sell a record 400 billion rupees ($9 billion) of assets and takeovers accelerate.

Foreign Investment

The National Stock Exchange sold a 5 percent stake to NYSE for $115 million in January 2007. Goldman Sachs Group Inc., General Atlantic LLC and Softbank Asian Infrastructure Fund also purchased 5 percent stakes at that time for undisclosed prices.

Foreign investment in the nation’s bonds and equities reached record highs last month, exchange data show, as companies including Infosys Technologies Ltd., India’s second- largest software services provider, posted earnings for the last quarter that met or exceeded the projections of analysts surveyed by Bloomberg.

Foreign holdings of India’s stocks and bonds reached all- time highs of $79.1 billion and $13.1 billion, respectively, on April 27, according to data from the Securities and Exchange Board of India.

The $1.2 trillion South Asian economy will grow at least 8 percent in the financial year that started April 1, compared with an estimated 7.2 percent in the previous 12 months, the central bank said April 20.

Temasek’s purchase has received the necessary regulatory approvals, according to the statement.

There were 1,470 companies listed on the exchange with a combined market capitalization of about $1.3 trillion as of March, according to the statement.

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