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Bahrain-based private equity firm Investcorp has acquired the National Stock Exchange’s Digital service business. Investcorp completed the deal for $120 million, which is around Rs 1,000 crore. This is said to be India’s largest private equity deal.
This deal does not include NSE’s digital examination business which offers:-
- Online recruitment and promotion tests &
- Upskilling services for corporates.
About NSE IT Division.
The NSE IT is the digital technology of NSE, India’s largest stock operator. It gives digital transformation and advanced cybersecurity services to:-
- Capital Markets.
- Insurance Companies.
- Banks in India, the Middle East, and North America.
What do the heads of companies say about this deal?
Ashish Kumar Chauhan, who is the CEO and MD of NSE, believes that this 1000 crore rupees deal was in line with NSE's strategy to focus on its core business areas. While Gaurav Sharma, head of India Investment Business at Investcorp says "It is a significant step in our expansion efforts in India and it underscores our commitment to investing in high-growth sectors"
How will Investcorp benefit from this deal?
The NSEIT expanded massively in the US over the last 4 years. They cater to diverse clients from investment banks, capital market players, and large conglomerates. It also operates in the West Asian markets. This buyout will help Investcorp leverage to operate in financial services for developed markets especially the US, said Varul Laul, partner at Investcorp.
“Given how rapidly the world is becoming digital, companies have realized that cybersecurity needs can be managed with a mix of in-house and outsourced capabilities. Since financial services are among the most regulated sectors in the world, a platform like NSEIT has gained importance," Laul explained on why NSEIT caught their eye.
Investcorp’s investment strategy
Investcorp has invested in many IT service firms globally. This includes Netherlands-based Netrom Software & UK-based Ubisense. In the last 2-3 years, Investcorp has shown interest in spaces specializing in the financial markets, cybersecurity, and digital transformation.
“When it comes to backing a mid-market IT services firm, the biggest question is how to compete with the large global players. This is where differentiation and quality of service come in," Sharma said.
While it manages over $50 Billion in assets worldwide, currently less than 2% of Total Assets are invested in India. The Investment firm aims to double down in the market and take this to $5 Billion AUM in the next 5 years.
NSE components are gaining value with growth exceeding expectations.
We did witness NSE’s skyrocketing growth in the last 1 year. From operations to financials, the stock exchange exceeded shareholder’s expectations. The daily trades have doubled from 29 crore on April 23 to 64.82 crore on March 24. The ADTV(Average Daily Turnover) grew almost 2X from Rs 51,726 crore on April 23 to Rs 97,739 crore on March 24.
The NSE Share price has given a whopping 33% Return from Rs 3600 per share on April 23 to Rs 4800 on April 24. The investors always had expectations about NSE in India but this growth was beyond their expectations.
NSE’s healthy financials and the expectation of increased investor participation prompted the recent decision to issue bonus shares
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