A Canadian investment firm moved Monday to purchase up to 5% of the National Stock Exchange of India, which dominates trading in that country's developing cash equities and derivatives markets.

Caldwell Investment Management is pursuing the $130 million deal, which values the privately-held NSE at approximately $2.55 billion, as a "proxy for India," according to Thomas Caldwell, chairman and chief executive of the Toronto-based firm.

"India's growing very fast, and it's not as dependent on other economies," said Caldwell in an interview with Dow Jones Newswires. "As the economy grows, the capital market will grow and that will benefit the exchanges."

Through its Urbana Corp. investment company, Caldwell Investment Management also owns about 4% of the Bombay Stock Exchange, India's second-largest stock-trading venue.

Caldwell estimated the NSE's domestic market share at 75% for cash equities and 98% for derivatives, with a customer mix that is heavy on financial institutions; the exchange owns its own clearinghouse and last year saw its futures and options trading activity rise by 55.4%, according to the Futures Industry Association.

Caldwell said his firm favors India among the BRIC countries (Brazil, Russia, India and China) because its legal and regulatory framework is better established.

Through an Indian intermediary, Caldwell Investment Management has the option of purchasing up to 5% of the NSE's equity. The asset-management firm is pursuing $50 million to $60 million in financing in the form of non-voting class stocks and warrants to help finance the deal.

"We would never do a financing at these levels were it not for the opportunity," Caldwell said.

Earlier this month, Norwest Venture Partners signed an agreement to buy 2.11% of the NSE.

The exchange's ownership also includes New York-based exchange operator NYSE Euronext (NYX), which bought a 5% equity stake for $115 million in 2007; Goldman Sachs Group Inc. (GS) and Citigroup Inc. (C) are also owners.

-By Jacob Bunge, Dow Jones Newswires; 312-750-4117; jacob.bunge@dowjones.com