Deutsche may buy 5% in DSE

German multinational bank, Deutsche Bank, is likely to buy a 5% stake in the Delhi Stock Exchange (DSE). If the deal happens, this would be the fourth major foreign investment in DSE after US-based Lamb Company, New Vernon Private Equity and Passport Global Master Fund SPC (British Virgin Islands) picked up stakes in the stock exchange.

The DSE got de-mutualised in August 2007 and has around 2,800 companies listed on the exchange with 1,800 companies trading exclusively on it.Earlier, the Foreign Investment Promotion Board (FIPB) had approved four foreign investors — Wilmette Holdings, Mauritius, Noor Financial Investment Company, Kuwait, Ikarus Industrial Petroleum Company, Kuwait and Kuwait Privatisation Projects Holding Company, Kuwait to pick 5% stake in the DSE, but the deal didn’t work out. DSE executive director Harjit Singh Sidhu declined to comment on the developments.

After the government announced that it will allow up to 49% foreign stake (including both FII and FDI) in Indian exchanges, a list of foreign companies have bought stake in Indian stock exchanges. The latest expression of interest came from Nasdaq, the largest electronic equity securities trading market in the US, to partner with Ahmedabad Stock Exchange (ASE).

Earlier this year, NYSE Euronext bought 5% stake in the Multi Commodity Exchange (MCX) for $55 million. The government has, however, capped foreign ownership for a single investor in commodities exchanges at 5%.

At DSE, foreign stake holders hold 15% stake and 36% stake is with private investors such as Parsvnath, Omaxe, BCCL and NDTV. Analyst believe that investment from foreign partners will add value and help regional exchanges acquire advanced technology.

RBI may block Citi`s plan to buy 3% in NSE

The Reserve Bank of India (RBI) may block Citibank India’s proposal to pick up 3 per cent stake in the National Stock Exchange (NSE).Citigroup already holds 2 per cent in the exchange.

A source close to development said the bank proposed to buy shares from the State Bank of India group, which holds 12 per cent (9 per cent by the State Bank of India and 3 per cent by subsidiary, SBI Caps).The bank has submitted a proposal to the RBI.

The banking regulator is of the view that Citibank India is a member of the Citigroup, which already owns 2 per cent stake in the NSE. Therefore, granting permission to Citibank India may lead to conflict of interest among related entities holding stake in the same entity.

As per the demutualisation norms, an individual entity cannot hold more than 5 per cent stake in an exchange. SBI and SBI Capital Markets have already pared their stake by 3 per cent and 2 per cent, respectively ,thus bringing down the combined stake to 12 per cent from 17 per cent earlier.

NSE has institutional holding from SBI, Industrial Development Bank of India, Corporation Bank, Oriental Bank of Commerce, Union Bank, Bank of Baroda and Canara Bank.Thus, NSE has already offloaded 26 per cent stake in favour of foreign investors as permissible under the foreign direct investment norms for stock exchanges.

DSE to become bourse for SMEs in revival bid

Struggling to revive its fortunes, the Delhi Stock Exchange (DSE) will explore ways to convert itself into a bourse for small and medium enterprises (SMEs) to resume trading, which has stopped since 2003 due to new market conditions.

The local bourse will explore the conversion once it sells 51% of brokers’ stake in the exchange by 28 August as required under the demutualisation process.
“DSE is fully geared to take up the role of SME exchange and after demutualisation we will be approaching Sebi in this regard,” DSE director and chairman, Demutualisation Committee, B B Sahny told PTI.

He also dismissed as speculation reports in some quarters that DSE would convert itself into a commodity exchange.Sahny exuded confidence that its effort to become an SME exchange would bear fruit, as even today 1,800 companies are exclusively listed with the DSE out of a total 3,000.

When asked that moves are already afoot to bring in a dedicated exchange for SMEs, he said instead of bringing new exchange for the purpose, DSE could handle the job as it already has infrastructure for that.To a query whether DSE would try to rope in other bourses for the SME exchange, he said initially it would be the local bourse on its own. “Other options could be explored later,” he said.

Sahny emphasised that an exchange for SMEs has to be outside Mumbai as some earlier attempts in this regard have failed since the exchanges were in Mumbai.

Read more in The Livemint article.

BSE demutualised; LIC, SBI, AV Birla group pick up stakes

The Bombay Stock Exchange, Asia’s oldest, on 18 May completed a nearly two-year exercise of corporatising itself by offloading 51% of broker members’ stake to 19 investors including SBI, LIC and Aditya Birla group, besides Deutsche Borse and Singapore Exchange.

The corporatisation or demutualisation process was to have been completed by 19 May as mandated by the Securities and Exchange Board of India under the BSE (Corporatisation and Demutualisation) Scheme, 2005.Before demutualisation, 790 broker-members held 100% in the 131-year-old exchange.

The 19 investors have picked up 41% stake and the remaining 10% was sold to Deutsche Borse and Singapore Exchange (SGX), who picked up 5% each for Rs189 crore at Rs5,200 a share earlier this year.The market capitalisation of the BSE now stands at around $1 billion.

T V Raghunath, executive president, investment banking, Kotak Mahindra Capital Company, which was the exclusive financial advisor to the demutualisation process, said that a total of $500 million was collected through the stake sale.

Read more in The Live Mint article.