On January 10, 2007, when the New York Stock Exchange (NYSE) picked up 5 per cent of the equity of the National Stock Exchange (NSE)-Goldman Sachs, General Atlantic and Soft Bank Asian Infrastructure also bought 5 per cent each-it would have caught the 132-year-old Bombay Stock Exchange (BSE) by surprise. After all, it was the BSE that was supposed to be looking to offload a stock; instead it was the NSE that silently went ahead and stole the show. The NYSE says it will pay $115 million (Rs 511.5 crore) for 5 per cent of the NSE, on which basis the 14-year-old exchange's valuation works out to $2.3 billion (Rs 10,350 crore).

So, after losing its monopoly to the NSE-which accounts for 60-65 per cent of the total traded turnover in Indian equity-has the BSE lost out in the race for a partner, too? Perhaps not. As Rashesh Shah, CEO & MD, Edelweiss Capital, points out, the NSE might have done the BSE a favour. "The stake has set the benchmark for the BSE. With the NSE being now valued at a little over Rs 10,000 crore, the BSE should receive a valuation of Rs 4,000-5,000 crore, on the basis of the NSE's average daily turnover being twice of BSE." For January 2007, the average daily turnover recorded by NSE is Rs 8,653 crore, compared to BSE's Rs 4,400 crore. Also, the NYSE was not the only exchange looking at India. According to BSE sources, the Nasdaq, London Stock Exchange, Singapore Stock Exchange, Australian Stock Exchange, Deutsche Börse and Euronext all want a share in Indian stock exchanges. Don't write off the BSE, not yet.

-Mahesh Nayak

Joining The PE Cult
When stocks peak out, brokers hit the PE trail.

Motilal Oswal: Sees a lot of action coming out of the SME space

A clutch of brokerages, meantime, has hit the PE trail. These include firms ask Raymond James and Motilal Oswal Securities. Says Sameer Koticha, Executive Director, ask Raymond James Securities: "We find huge untapped value available in the small & medium enterprises (SME) unlisted segment. There are many companies that can become biggies of tomorrow, if given right funding and advice. And we feel with our expertise we can do wonders in that space." The brokerage firm under Koticha is all set to open its own private equity fund which plans to garner money from investors who are ready for a minimum investment horizon of 4-6 years.

Motilal Oswal Securities, through sister concern, Motilal Oswal Venture Capital Advisors (MOVCA), has collected just over $40 million (Rs 180 crore). The fund will eventually hit $100 million (Rs 450 crore) by the third quarter of 2007-08. Says Vishal Tulsyan, Director & CEO, MOVCA: "We will be investing primarily in SMEs, especially unlisted companies, with an investment between $3 million and $7 million. We feel the strong undercurrent in the economy can see many of these SMEs grow 2-3 times their size in the coming years." MOVCA will look to pick up between 10 and 24 per cent of equity in SMEs. For Motilal Oswal, this is a mere extension of its brokerage business. "A strong distribution network, client base (high net worth individuals who run family or partnership business) and strong research platform built over a period of time will help us to garner business," adds Tulsyan.

Other firms in the PE space include Ambit RSM, which bought India Value Fund, the erstwhile GW Capital, last year. A corpus size of $200 million (Rs 900 crore) makes available financial and intellectual capital to growing middle-market companies in India. Enam Financial Consultants has preferred to foray into PE advisory services. In the past 18-20 months, Enam has struck deals worth over Rs 1,000 crore by syndicating money for 13 companies, including GMR Infrastructure and Geometric Software. "By March, we will be striking deals worth half a billion," says Ambrish Singh, Head of Private Equity Advisory of Enam Financial Consultants. Singh is on the verge of raising $100 million for a media company from international private equity players.

There are also some brokers who are putting their personal wealth on the table as PE money. The founders of Enam have a separate set-up dedicated to funding tomorrow's jewels. And Sameer Gehlaut, Chairman of Indiabulls Financial Services, has bought 25 per cent in bag Films for a sum of Rs 26.2 crore in his personal capacity. That's one way of distributing wealth.

-Mahesh Nayak

Viewers Nod Off
The rollout of CAS impacts television viewership.

The rollout of conditional Access System (CAS) in the New Year is touted the best gift for the couch potato-fork out lesser money and choose the channels you want to watch seems to be the proposition. CAS requires viewers to install a set-top box, for a nominal fee, to watch their favourite channels on television. In addition, CAS viewers also have to pay Rs 5 per month for viewing each pay channel.

With the deployment of CAS in certain areas of Mumbai, Kolkata and Delhi, the net reach of mass entertainment channels like Star Plus, Zee, and Sony (which are pay channels) seems to have come down in these cities. According to figures from TV ratings agency aMap, the net reach of the mass entertainment channels has fallen by 8 per cent in the first 18 days of January compared to the last month of 2006. The amount of time spent watching these channels, in the three cities, has dipped by 7 per cent for the same period. According to aMap, the net reach of Zee TV, Star Plus and Sony has dipped 28, 22, and 26 per cent, respectively, in the three cities. Hindi movie channels and entertainment channels for children, which are also pay channels, have also shown a dip in viewership. Channels, however, are not overtly concerned at least for now. "It's a transitional phase and happens with every industry when a new technology is being adopted. Things will stabilise within a quarter or so," says Ashish Kaul, Senior VP, Corporate Brand at Zee TV.

-T.V. Mahalingam