NYSE Group ( NYX) won't be resting on its laurels anytime soon, thanks. Now that the parent of the New York Stock Exchange has virtually sealed a deal to acquire Europe's Euronext, the Big Board has set its sights on a big exchange in Asia. The NYSE agreed Wednesday to
take a 5% stake in the National Stock Exchange of India for $115 million in cash. Though the stake is a small one -- 5% is the maximum allowance for foreign investments under India's laws -- it advances the NYSE agenda of becoming a global cash equities exchange. The NYSE is expected to close on its $14 billion deal for Euronext in March, creating the largest trans-Atlantic exchange. The stake in the NSE "complements our global growth strategy," says NYSE CEO John Thain. "Through a mutually beneficial partnership, the NSE and NYSE Group, and the futures NYSE Euronext will extend our global reach, strengthen relationships with customers and advance our competitive position in India and throughout the region." Asia has clearly been on Thain's mind. He has previously said that NYSE was in preliminary talks with the Tokyo Stock Exchange to discuss joint venture options. Goldman Sachs ( GS) and two private-equity firms, General Atlantic and Softbank Asian Infrastructure Fund, also have bought 5% stakes in the Mumbai-based exchange, the NSE said.
Selling stockholders include Icici Bank, Industrial Finance Corp. of India, IL&FS Trust, Punjab National Bank and General Insurance Corp. of India. The deal is expected to close later this quarter. "In a rapidly integrating world of financial markets, this timely partnership brings together the strengths of institutions from North America, Europe and Asia," says NSE CEO Ravi Narain. "This alliance marks a significant milestone for NSE in developing a place for itself in the emerging global scenario. The global financial investors are amongst the most pedigreed institutions in the world, and will contribute to building value in the NSE." Observers seem pleased with NYSE's doubled-up efforts to go global. The stake "strengthens NYSE's brand as a global exchange," writes Ken Worthington, an analyst at JPMorgan Chase, in a note on Wednesday. "This should improve the chances that it wins incremental listings business with the potential for larger eligible U.S. global companies currently listing on Nasdaq." Hedge fund Atticus Management, which owned 8% of NYSE as of the end of September, said it "applauds" the investment in an "exciting market with a great growth outlook," a spokesman said. "While this is a small financial investment for the NYSE Group, it underscores the company's focus on creating growth opportunities through both additional listings and new products," Atticus adds. "The investment is further evidence of the ongoing consolidation of the global exchange space, in which NYSE continues to play the leading role."
The NYSE's gains come in stark contrast to the Nasdaq Stock Market's ( NDAQ) troubled expansion efforts. The Nasdaq has seen its shares crumble in the wake of its hostile bid to acquire the London Stock Exchange. The LSE has vehemently opposed the deal. The two exchanges have been engaged in a war of words of late. Last year, the NSE had an average daily traded value in equities around $2 billion and an average daily trade value of about $7 billion in derivatives. NYSE currently lists 10 companies from India on its exchange. Shares of the NYSE fell 61 cents, to $103.97.