Bangladesh Securities and Exchange Commission (BSEC) yesterday gave its approval to an offer by the Chinese consortium of Shenzen Stock Exchange (SZSE) and Shanghai Stock Exchange (SSE) to be a strategic partner of the Dhaka Stock Exchange (DSE) along with 25 per cent ownership of the bourse. The BSEC gave the approval on the DSE’s strategic partnership, fixing each of 450,944,125 DSE shares at a price of Tk 21, the regulator said on its website.
The agreement must be signed in line with Bangladesh’s laws and implemented in one year from the signing of the deal, it said.
The DSE submitted a revised strategic partnership proposal to the SEC earlier in the day following the regulator’s instruction, said sources.
“It’s a historic day for Bangladesh’s stock market,” former DSE President Shakil Rizvi said in his instant reactions.
“The DSE is going to become a multinational company through this, which will also boost other business. It will have a positive impact on the overall economy.”
During the tendering process, another
consortium of India’s National Stock Exchange (NSE), Frontier Bangladesh and Nasdaq of the US took part in the bidding to become the DSE’s partners. The other consortium has offered Tk 15 per share to buy 25.1 percent of the DSE.
On February 19, the Dhaka Stock Exchange (DSE) decided to pick the Chinese bidder as its strategic partner and holder of its 25 per cent ownership rather than an Indian bidder, as the bourse found the bid by the Chinese consortium to be clearly advantageous.
On February 27, the regulator asked the DSE to clarify what the BSEC termed as ‘violations of rules’ by the Chinese consortium of Shenzen Stock Exchange and Shanghai Stock Exchange.
On March 05, the Dhaka Stock Exchange (DSE) gave replies to the queries made by BSEC over the ‘violations of rules’ in its bid by a Chinese consortium, which the bourse had picked as its strategic partner though a tendering process.
The DSE is selling one-fourth of its stake to foreign bidders. The DSE has been demutualised meaning its ownership is divided between members and outsiders to remove conflicts of interest.
After the DSE floated tender for its 25 per cent stake, a Chinese consortium of the SSE and Shenzhen Stock Exchange (SZSE) submitted a tender, offering Tk 22 a share for 25 per cent or 45.09 crore shares (worth Tk 992 crore) of the DSE.
The SZSE and SSE are among the top three bourses of China, other being the Hong Kong Stock Exchange.
The Indian consortium of the NSE, Nasdaq of the USA and Frontier Bangladesh, meanwhile, quotes Tk 15 a share which results in Tk 676 crore for the 25 percent stake, a significant 47 per cent less than the Chinese offering. The Chinese consortium also offered a free technical support to the DSE for 10 years, which is worth around Tk 307 crore, whereas the Indian consortium made no clear-cut proposal of any technical support.
The Indian side also wanted two positions of director at the DSE. The demutualisation rules allow keeping only one board position for a ‘foreign entity’ owning its 25 per cent stake.
The Chinese consortium wanted to be a long-term strategic partner without imposing any condition, while the Indian consortium imposed the condition of retrieving investment after five years.
The Chinese consortium has already garnered necessary approval from all of its local regulators in the country for being the strategic partner of the DSE, whereas the Indian consortium hasn’t got the necessary approval from Securities and Exchange Board of India and Reserve Bank of India.
MK