Mauritius-based Soach Global to make 25 times return from NSE IPO

Soach Global is set to make nearly 25 times return from a partial exit in the National Stock Exchange IPO, turning a decade-old investment of Rs 59.25 crore into a much larger payday. Soach Global Strategic Holdings, Mauritius, a wholly owned subsidiary of Soach Global Opportunities Fund, is selling 16.5 lakh NSE shares through the exchange’s offer for sale. The NSE IPO opened for subscription today.

The fund had bought 1.5 lakh NSE equity shares from Industrial Finance Corporation of India in January 2016 at Rs 3,950 per share, for a total investment of Rs 59.25 crore. Over the next 10 years, the holding increased to 82.5 lakh shares through corporate actions, without any further investment. After adjusting for these corporate actions, the fund’s average acquisition cost works out to Rs 71.8 per share.

At the NSE IPO price band of Rs 1,700-1,785 per share, Soach Global’s sale of 16.5 lakh shares is valued at about Rs 280-295 crore. This is almost five times its original investment, even though the fund is selling only 20% of its holding.


The remaining 80% stake, or 66 lakh shares, will continue to be held as a long-term investment. At the IPO price band, this residual holding is valued at about Rs 1,120-1,180 crore.

The numbers show how sharply NSE’s value has compounded for some early investors. Soach Global’s adjusted cost of Rs 71.8 per share is far below the IPO price band, making the partial exit a major liquidity event for the fund.

Anubhav Dayal, Founder and Director of Soach Global Opportunities Fund, said the fund is selling only a part of its stake because it wants retail investors to get a chance to own NSE.

"Bharat is a fast-growing economy with a large number of growth-aspiring youngsters who are quickly learning the risks and rewards of participating in capital markets. We are participating in the offer for sale and selling a partial stake of what we own because we would like to see a large number of the mass retail population hold some stake of NSE," Dayal said.

Also Read: $46 billion IPO: NSE is the world’s most expensive stock exchange. Can it also become the most valuable?

He added that retail investors buying small stakes in NSE, directly or indirectly through mutual funds, could benefit from the exchange’s growth in the same way Soach Global has benefited from buying the stock more than 10 years ago.

Dayal pointed out that only about 130 million people are registered investors on the NSE, out of India’s 1.4 billion population, highlighting the larger opportunity.

The fund compared NSE shares with long-held family gold, saying the exchange could be treated as a long-term asset because of its role in India’s capital market infrastructure.

"In our country, we have a culture of buying gold at a festival or for a ceremony. Gold, once purchased by a family, is held for a long time, even generations. It is sold only when in desperate need of money. Retail buyers can compare shares of NSE with buying gold," Dayal said.

Dayal said NSE is a multi-asset trading platform with a large fixed-cost base and scope to grow revenue as India adds more tradable products. He cited equities, commodities, electricity futures, bond index futures and coal as examples of products that can add to revenues over time.

Also read: NSE IPO Tracker: Catch all the highlights here

The NSE IPO is entirely an offer for sale, meaning the exchange will not receive fresh capital from the issue. Existing shareholders are selling part of their holdings to public investors.

Disclosure: This article has been written by Podishetti Akash, who is not a SEBI-registered Research Analyst or an Investment Adviser. Podishetti Akash and her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclourses here.