IDFC chief Vikram Limaye was on Wednesday appointed as the Chief Executive and Managing Director of the National Stock Exchange.
The appointment will have to be approved by market regulator Securities and Exchange Board of India (SEBI), IDFC said in a statement.
Limaye, who has been closely involved with the country financial markets for over two decades, said his priorities would revolve around developing the markets which are crucial to fund the country's growth. “I don’t think the needs of the country can be funded purely through banks,” he added.
The post of Managing Director at NSE has been vacant since Chitra Ramakrishna quit on December 2 citing personal reasons. Three days later, the NSE set up a four-member committee to look for the next MD of the bourse.
Going ahead, corporates will require other avenues to fund their growth, which will have to be market-related instruments, Limaye said, adding that the NSE has a very important role to play to fund the country’s growth.
Refraining from commenting on the specifics, Limaye said issues between NSE and SEBI, if any, will be a priority for him.
The country's largest bourse is gearing up for its much-awaited initial public offering this year. Last December, NSE had filed draft papers with SEBI for its much-awaited IPO which is expected to be one of the biggest in recent times.
After getting SEBI nod to become CEO of NSE, Limaye said the bourse’s public offer will be taken up with a sense of urgency."In general, institutional investors and markets are very receptive to good quality organisations and good quality growth stories. From that perspective, I don’t see any reason why NSE’s IPO should not be well received," he said.
The IPO would see existing shareholders offloading 20-25 per cent shares to the public through the OFS route. The offer is expected to give the exchange a valuation of Rs 50,000-55,000 crore and the IPO could be worth about Rs 10,000 crore. The IPO is being managed by Citigroup, Morgan Stanley, JM Financial Institutional Securities and Kotak Mahindra Capital Company.
Earlier in the month, the Supreme Court had appointed Limaye as a member of a four-member panel that will look after the day-to-day functioning of the Board of Control for Cricket in India (BCCI).
Terming the appointment “an interim arrangement”, Limaye said NSE will be his priority. “I don’t think there will be anything that will come in the way of my commitment and time to NSE,” he asserted.
Below is the transcript of Vikram Limaye’s interview to Prashant Nair on CNBC-TV18.
Q: It is a big day for you.
A: I certainly believe it is a unique opportunity to lead an institution like the NSE which I believe is an institution of national importance. So, I certainly welcome the opportunity and I am grateful for the opportunity.
Q: Have all the hurdles been crossed in terms of the appointment because the selection panel recommended the name to the board, the board would have sent the name to the Securities Exchange Board of India (SEBI) Chairman and they would have had to take off on this. So, one assumes that we have the official release from the National Stock Exchange (NSE), so all the formalities have been cleared on this one?
A: No, actually, if you look at the release, it should state that it is subject to approval of SEBI and shareholders. So, SEBI and shareholder approval is still awaited.
Q: But, obviously without pre-empting, that seems like a formality?
A: I would not take anything for granted. It is an approval of the regulator and the shareholder, so we have to respect that process and so we will have to wait for the outcome of that process.
Q: You, intimately have been involved with the financial markets for two and half decades in various capacities. You have held senior position at Credit Suisse First Boston before you came back to India to run IDFC. What do you think are going to be your priorities as the CEO and MD at NSE?
A: As a start, what I would state, which I have stated before, NSE is a unique institution of national importance and has an importance role to play in market development. I believe in the next few years, to fund the country’s growth will require market related products and a more broad-based development of markets across different products. I do not think the needs of the country can be funded purely through bank financing. If you look at even the recent regulations that the Reserve Bank of India (RBI) has come out with, they are actually cutting back on the exposure that banks can take to corporates in terms of single company and group exposure limits, etc. So, that will necessarily require corporates to have other avenues to fund their growth which will again have to be market-related instruments.
So, market development is extremely important for the country’s future and to fund the country’s growth and the NSE obviously has a very important role to play in that effort. From that standpoint, that is certainly an important part of what the NSE can contribute to the country’s development. Obviously, it has got a very strong market share in the businesses that NSE is in and from a business perspective, there will be opportunities to own the business footprint in different areas, different products, geographies, etc. So, there enough to do given that the country should be on a growth path over the next several years.
Q: So, introducing new products, contracts, etc. is a part of that at the NSE, right? It of course is the leader.
A: Yes, it is a leader in many of the areas that it participates in, but the broader point I am making is that there are many parts of the landscape that are underdeveloped. For instance, the bond market is underdeveloped. There will be products surrounding bond market development that will need to be developed whether they are hedging product or otherwise. So, the broader point I am making is that there are various parts of the market that need to be developed and the NSE has a very important role to play in that. Obviously, it will have positive implications from a business perspective as well for NSE.
Q: You have been dealing with regulators regularly. NSE has been involved in this case where there has been alleged impropriety, unfair access. You are well aware of the issue, what is your game plan going to be to put this behind the National Stock Exchange?
A: I am not going to comment on the details or specifics of the matter because unless I get involved in it, I will not have sufficient details to comment on it. The limited comment I have is that, if there are any issues between NSE and the regulators that need to be sorted out, that would certainly be priority in terms of making sure that all those issues do get sorted out.
Q: Have you already been briefed about the entire matter or only once you takeover would you sort of get into the nitty-gritties of the matter?
A: I will try and get an understanding of what the issues are once I have the full approval of SEBI and shareholders etc. However at this point in time I do not have sufficient details surrounding these issues.
Q: When are you taking over officially?
A: That is not yet decided because we have to go through the process and then take a call on what an appropriate date of joining would be.
Q: Would you need time to wind up your responsibilities at IDFC? If the approval from the regulators and shareholders for example were to come within this week, how long would you take at your end to make the shift?
A: I don’t want to get into that because that has not yet been decided and discussed. I don’t want to comment on matters that have not been discussed.
Q: The other big issue has been the IPO. NSE itself coming to the market with an IPO. We have seen the great response that rival stock exchange BSE has got. People that we have been speaking with in the NSE and bankers involved as well, have been saying that it is much better if NSE has a permanent CEO to kind of front with investors, to do roadshows and kind of generate interest. How much is that going to be? You would be hitting the ground running on that as well as soon as you take charge?
A: Yes certainly that would be an important priority and near-term priority to focus on. So, that would clearly be an urgent thing to get done.
Q: You are again somebody who has sort of faced investors in your earlier roles. You are very well versed with some of the largest investors. What is the kind of interest that you gauge? You would already have a sense because these are people that would be invested in your earlier organisations as well?
A: I was also involved in taking IDFC public in 2005 and then many rounds of capital raising after that as well. So, I do have experience in what it takes to go public and dealing with investors and institutional investors etc.
My own view is given the quality of the institution it should certainly be very well accepted by the market.
In general institutional investors and markets are very receptive to good quality organisations and good quality growth stories. From that perspective, I don’t see any reason why NSE’s IPO should not be well received.
Q: You are also now involved with the BCCI. What should we expect in terms of how that is going to proceed because that is also a big responsibility?
A: I don’t want to get into BCCI as part of this conversation. Suffice to say that that is certainly not an operating role. NSE will be the priority. That is something that we have been tasked with by the Supreme Court of India. It is not running BCCI on a day to day basis. They have a full management team and an organisation etc. It is a limited purpose to try and get certain things done and then to step out. So, it is an interim arrangement to get permanent people in place and then to step out. However, priority obviously will be NSE. I don’t think there will be anything that will come in the way of my commitment and time to NSE.
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