BSE to buy S&P's 50% stake in index joint venture for Rs 30 crore

Domestic bourse BSE has approved the acquisition of a 50 per cent stake in index provider Asia Index (AIPL) from equal joint venture partner S&P Dow Jones (SPDJ) Indices for Rs 30 crore.

AIPL, the index provider, is responsible for compiling and maintaining the widely followed Sensex, Bankex, and other indices.

Passive funds with assets of nearly Rs 2 trillion are benchmarked with indices provided by AIPL.

The exit for S&P Dow Jones Indices from the equal JV is expected to be completed by May 31.

Post the completion of the transaction, the index provider will become a wholly owned subsidiary of BSE and the joint venture with SPDJ Singapore will be terminated.

The market regulator Securities and Exchange Board of India (Sebi) had approved the acquisition in December 2023.

AIPL had a net worth of Rs 57.82 crore as of March 31.

AIPL has two business segments, namely index and support services.

While the index business caters to passive funds, exchange-traded funds, and other mutual fund products, the support services segment provides outsourced services to S&P Dow Jones Indices and its affiliates.

The support services segment will terminate with the completion of the divestment by SPDJ of its shares in AIPL, said BSE in an exchange filing on Monday.

The share purchase agreement will result in BSE having a similar structure to bigger rival NSE, where they fully own their index providing arms.

BSE and S&P had set up the JV in 2013 after the licensing arrangement between NSE and S&P-owned Crisil had ended.

In 2018, BSE had planned to terminate the contract.

However, in 2020, the Singapore International Arbitration Centre (SIAC) had declared that the termination of the agreement with SPDJ with respect to the joint venture was invalid.

Now, both partners have mutually agreed on the termination.

Recently, financial regulators Sebi and RBI have come out with regulations that mandate index providers to register with them.