The Hindu Business Line : Singapore exchange buys 5% in BSE

SINGAPORE SE BUYS 5% IN BSE: Mr Rajnikant Patel, Managing Director & CEO, Bombay Stock Exchange Ltd, with Mr Hsieh Fu Hua, CEO, Singapore Exchange Ltd (SGX), at a press conference announcing a tie-up between BSE & SGX in Mumbai on Wednesday. - Shashi Ashiwal

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Mumbai March 7 Singapore Exchange Ltd (SGX) will be acquiring five per cent stake in the BSE for Rs 189 crore as part of its strategy to create an Asian gateway for securities and derivative products.

Both entities have entered into an agreement for SGX's subscription of about four lakh shares in BSE at Rs 5,200 a share. This will be SGX's first investment in a foreign exchange.

The Singapore exchange will be the BSE's second foreign partner, after the Mumbai-based exchange sold five 5 per cent stake to German exchange Deutsche Boerse AG at a similar price.

For the BSE, the selling of stake is part of its demutualisation exercise. Besides, it expects to introduce new products and develop deeper technological knowhow in derivatives trading.

Mr Rajnikant Patel, CEO and Managing Director of the BSE, told newspersons that the strategic tie-up would offer the "Asian advantage" to the exchange.

He also said that the two exchanges have agreed to actively explore collaboration in various areas relating to listings and product development, leveraging on SGX's leading position as a regional hub for derivatives and international listings.

To a question, Mr Patel said that the BSE would be issuing fresh shares to foreign exchanges. Currently, the exchange's share equity stands at 6.9 million shares.

The price SGX is paying works out to a price-earnings ratio of 41.82. Mr Patel said that the valuation was proper, as internationally, stock exchange shares are trading at PE multiples of 35-48.

Mr Hsieh Fu Hua, CEO of SGX, said: "We are looking forward to supporting the BSE's goal to strengthen its international position. Together, we aim to identify new business development opportunities and to foster an enduring partnership."

The BSE has a May 19 deadline, set by the SEBI, to sell as much 51 per cent of its equity to investors.

The exchange will be diluting the stake through an offer for sale or issue fresh shares.