Business Daily from THE HINDU group of publications
Thursday, Feb 15, 2007
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Business Daily from THE HINDU group of publications Thursday, Feb 15, 2007 ePaper |
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Stock Exchanges Markets - Mergers & Acquisitions Our Bureau
GOING GLOBAL: (from left) Mr Rajnikant Patel, MD & CEO, Bombay Stock Exchange Ltd, with Mr Jagdish Capoor, Chairman, and Mr Reto Francioni, CEO, Deutsche Borse, at a press conference to announce their agreement on Wednesday. - Paul Noronha
This is the first divestment of BSE's equity after the 132-year-old exchange became a corporate entity last year. The Frankfurt-based leading European exchange will buy 3.63 lakh BSE shares at a price of Rs 5,200 per share. The transaction puts the value of the BSE at Rs 3,777 crore, said Mr Rajnikant Patel, Managing Director and CEO of the BSE. Including the five per cent additional capital infusion, the enterprise value of the BSE will go up to $910 million from $854 million, he said. BSE will issue fresh equity to the foreign strategic investor, Mr Patel said at a press conference. The composition of the BSE board will remain unchanged post the dilution, he said. "The transaction is an important step for the BSE towards realising its mission to emerge as the premier Indian stock exchange by establishing global benchmarks, Mr Rajanikant said. In terms of business, profitability and market capitalisation, Deutsche Borse ranks among the top exchanges of the world, he said. BSE is the second Indian stock exchange in which foreign investors have picked up stakes after the capital market regulator SEBI announced FDI norms for stock exchanges. Last month, the New York Stock Exchange and three other international investors including Goldman Sachs bought 20 per cent equity in National Stock Exchange. The purchase price reportedly ranged from Rs 2,200-2,500 per share. Mr Reto Francioni, CEO, Deutsche Borse said: "We see the exchange business becoming increasingly global and this partnership is our joint effort to benefit from each other's strength while establishing a presence in multiple time zones and regulatory environments." As per SEBI norms, the BSE will have to dilute its members stake to 49 by May 19 this year. FDI in stock exchange is allowed only up to 26 per cent with a five per cent cap on single entity. Mr Patel said no decision has yet been taken regarding the IPO. "We may or may not use the IPO route for raising capital." The exchange can also dilute the complete stake through private placements as it is a faster route. Several domestic financial institutions have already approached the BSE, said Mr T.V. Raghunath, Executive Director-Investment Banking, Kotak Mahindra Capital Co Ltd, which advised the BSE on the Deutsche Borse deal. Responding to a question, Mr Patel said the BSE may allow another foreign bourse to pick up 5 per cent stake if the areas of interest of the new partner does not overlap with the earlier one said. The BSE recorded Rs 90 crore as net profit for FY'06. The PE multiple was 41.8.
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