Chinese party closer to 25pc stake in DSE

The consortium of the Shanghai Stock Exchange and the Shenzhen Stock Exchange is one step closer to the 25 percent stake of the Dhaka Stock Exchange and becoming its strategic partner after the premier bourse's board yesterday accepted its proposal.

Approval from the stockmarket regulator is the final hurdle for the Chinese consortium, which offered Tk 990 crore for the shares as well as technical support worth $37 million (about Tk 300 crore).

“We will send the investment proposal of the Chinese party to the Bangladesh Securities and Exchange Commission by this week,” said KAM Majedur Rahman, managing director of the DSE, right after a board meeting. The proposal trumped the bid from an Indian consortium led by the National Stock Exchange (NSE), which last week had engaged in fervent lobbying with the BSEC to persuade the DSE to go for its lesser offer. The proposal trumped the bid from an Indian consortium led by the National Stock Exchange (NSE), which last week had engaged in fervent lobbying with the BSEC to persuade the DSE to go for its lesser offer.

The Indian consortium has offered Tk 675 crore for the shares and wanted two seats at the DSE board.

In contrast, the Chinese party sought a seat at the DSE board and assured that it will not ask for any return on its investment for 10 years.

The DSE board had chosen the Chinese consortium's proposal earlier on February 10.

Upon hearing the development, Vikram Limaye, managing director and chief executive of the NSE, rushed in to Dhaka and barged into a regulatory meeting to stop the Chinese deal going through.

On the same day, BSEC called the DSE's Chairman Abul Hashem and Rahman and asked them to further scrutinise both the proposals -- a move that left the DSE members agitated as they viewed it as the stockmarket regulator doing the bidding for the Indian party.

Meanwhile, the Transparency International Bangladesh in a press statement on Friday criticised the BSEC's role in the DSE share sale, alleging that the stockmarket regulator is illegally interfering in the process.

TIB Executive Director Iftekharuzzaman said that a certain Indian firm is trying to influence the BSEC's selection process. “It is disappointing, unexpected and unethical,” he added.

BSEC refuted the TIB's allegations, adding that it is yet to receive any proposal from the DSE to consider.

The country's premier bourse's hunt for a strategic partner comes as part of its conditions for demutualisation in 2013, which transformed it from an entity owned by mostly brokerage-owning members into a for-profit company owned by shareholders.

The move separated the bourse's management from ownership, and was a major recommendation of the stockmarket probe conducted by a government panel in the aftermath of the market crash of 2011.

According to the Demutualisation Act 2013, 40 percent of the stock exchange's shares should be allocated to DSE members, 25 percent to international stock exchanges and 35 percent to the public.

On December 9, 2015, the BSEC under the Demutualisation Act 2013 directed the DSE to get a strategic investor within a year.

The commission later extended the deadline to June 30, 2017 following a plea from the DSE.