NSE Implements 1% Cut In Transaction Charges, Initiates Divestment From Non-Core Businesses; Details

The National Stock Exchange (NSE) has greenlit a 1% reduction in transaction charges for cash equity and equity derivatives, set to take effect from April 1, 2024. Simultaneously, NSE is gearing up to exit non-core businesses, marking an important moment in the organization's evolution.

The decision to slash transaction charges is expected to have a considerable impact, affecting the company's annual revenue from transaction charges by approximately Rs 130 crores. This move is seen as a proactive step to incentivize trading activities on the exchange platform and foster a more dynamic market environment.

NSE has set the stage for divesting from non-core businesses, primarily technology and education. The divestment process has witnessed substantial interest, with over 60 parties expressing their desire, and seven submitting non-binding bids. After a meticulous due diligence process, final offers were received from two buyers, culminating in the selection of the highest bidder, who has now entered into exclusive negotiations.

Avendus spearheaded the transaction advisory role, supported by Deloitte for Finance & Tax diligence, Deloitte as the tax adviser, and Indus Law providing legal counsel. The expected completion date for the sale is March 31, 2024.

As part of the divestment strategy, NSEIT Limited, a wholly owned subsidiary, is set to sell its digital technology business, which includes subsidiaries NSEIT US, Aujas Cybersecurity Limited, and CXIO Technologies Limited. Investcorp has emerged as the acquiring entity, with a total agreed value of Rs 1,000 crores. The Enterprise Value for the Digital Technology Business is anticipated to fall within the range of Rs 425 crores to Rs 475 crores.

The move aligns with NSE's focus on streamlining its core operations and shedding non-essential businesses. The decision to divest through a slump sale underscores the strategic approach, ensuring a smooth transition and maximizing value for both NSE and Investcorp.

Providing insight into the financial implications, NSEIT's standalone business is delineated into two main segments: Digital Examination Business and Digital Technology Business. The current divestment exclusively pertains to the Digital Technology Business, emphasizing the targeted approach in reshaping NSE's portfolio.

For FY23, the total operating income stood at Rs 695 crores, with a year-to-date figure of Rs 639 crores as of December 31, 2023. The net worth for March 31, 2023, and December 31, 2023, was Rs 256.91 crores and Rs 327.60 crores, respectively, accounting for 5.86% and 1.25% of NSE Consolidated financials for FY23.