Some foreign investors are accusing India’s National Stock Exchange (NSE) of dragging its feet on an initial public offering, saying management is ignoring them and purging their views from minutes of
Some foreign investors are accusing India’s National Stock Exchange (NSE) of dragging its feet on an initial public offering, saying management is ignoring them and purging their views from minutes of meetings, letters and emails show.
Five investors, who together own 10.1 per cent of India’s biggest exchan-ge by trading volumes, said “shareholder interest and corporate governance norms have been blatantly disregarded” as a result, according to a March 7 letter sent to the bourse and seen by Reuters, which has previously not been reported.
“The NSE is a model of poor corporate governance,” said Sohil Chand, a managing director at US firm Norwest Venture Partners, one of the foreign funds that signed the letter, in an interview. “There is zero transparency and there’s zero accountability.”
An NSE spokesman rejected the accusations but declined to discuss individual letters. “We do not want to respond to those misplaced concerns and motivated campaigns,” the spokesman said in an email.
The investor letters and emails mark an escalation in a months-long battle between the exchange and these investors over a potential listing of the NSE. The funds, some of which have invested in the NSE for almost a decade, want the exchange to list as soon as possible so that they can exit and pay back investors in their funds.
But the company has been reluctant because Indian law requires it to list on another exchange rather than on itself, which would expose it to being regulated by a rival bourse.
The NSE has said it is lobbying regulators for permission to self-list or be regulated by the country’s securities regulator.
The fight is the latest sign that shareholder activism, though still rare, is beginning to gain traction in India, where companies face few challenges from investors and governance problems are common. Most recently, Children’s Investment Fund waged a two-year battle against Coal India and the government over accusations of mismanagement, which ended after the British-based hedge fund exited from its investment in 2014. That increased activism is visible more broadly across Asia, as investors seek better returns amid low interest rates and sluggish global growth.
