FINDING STRATEGIC INVESTORS : DSE, CSE to seek more time as Dec 9 deadline looms

HM Murtuza | Published: 01:23, Oct 29,2016

 
 

The Dhaka Stock Exchange and the Chittagong Stock Exchange are likely to seek more time from the Bangladesh Securities and Exchange Commission for finding their respective strategic investors to whom the bourses will sell 25 per cent of their shares.

The Dhaka Stock Exchange and the Chittagong Stock Exchange are likely to seek more time from the Bangladesh Securities and Exchange Commission for finding their respective strategic investors to whom the bourses will sell 25 per cent of their shares.
The demutualised bourses of the country are supposed to get their strategic investors by December 9 this year.
Officials of the bourses, however, said that the stock exchanges would require more time as the responses made by the probable strategic investors to the bourses’ call so far were not satisfactory.
As the capital market has been passing through a dull time since the 2010 market crash in terms of turnover at the bourses, earnings of the bourses are also on the decline, they said.
In this situation, renowned foreign investors, who will be able to add value to the bourses, will not feel interested in becoming partners of the bourses, they said.
The bourses also will not get much scope for bargaining with the foreign investors regarding the pricing of shares, officials of the bourses said.
On the other hand, shareholders of the bourses prefer going slow to taking any organisation as strategic investor without ensuring fair prices of the shares, they said.
On December 9, 2015, after two years of the bourses’ demutualisation, the BSEC directed the bourses to seek strategic investors within one year.
The Dhaka and Chittagong stock exchanges became demutualised on November 21, 2013 following a recommendation of the capital market investigation committee on the 2010-11 market crash that made thousands of investors penniless.
‘The DSE is searching for a strategic investor for the bourse, which will be able to contribute positively to our organisation as well as to the country,’ DSE managing director KAM Majedur Rahman told New Age recently.
‘We have received some positive responses from some organisations. But, we cannot do anything quickly due to procedural requirements, even if we choose someone from the organisations which have showed interest,’ he said.
So, it will be difficult for the bourse to complete the procedure within the stipulated time (December 9), he said.
Terming the present market situation dull, a DSE shareholder-director said, ‘I think that the bourse should take more time as none will be benefited if we hurriedly sell our shares at cheap to any foreign organisation.’
A consortium of World Bank Group’s International Finance Corporation, German development bank KfW, Commonwealth Development Corporation, US-based NASDAQ, Sweden-based Brummer & Partners and Bangladeshi Square Group expressed primary interest in becoming the strategic partner of the DSE. A number of other organisations also expressed the same interest.
CSE managing director M Shaifur Rahman Mazumdar told New Age, ‘We are communicating with a number of local and international organisations, but the progress is not that significant.’
He also said that it might not be possible for the bourse to get a strategic investor by December 9 considering the relevant factors including choosing a suitable investor.
‘Apart from complying with the regulatory order, shareholders’ consensus is another major factor in this regard,’ Mazumdar said.
The CSE has already communicated with a number of foreign organisations including Nasdaq as well as with a number of local organisations including state-owned Investment Corporation of Bangladesh.
While addressing a function on July 16, BSEC chairman M Khairul Hossain said unless any significant progress was made, allowing more time for the purpose of finding strategic investors would not be possible for the commission.
As per the demutualisation rules, the commission may allow the bourses more time for finding strategic investors if they fail to find strategic investors within one year.
The shares, which are kept for strategic investors, can be allotted to other individuals with prior approval from the commission if any exchange fails to sell shares to any strategic investor.
According to the demutualised scheme of the stock exchanges, the DSE consists of 180,37,76,500 shares and the CSE 63,45,24,840 shares of Tk 10 each considering Tk 1,803.77 crore and Tk 634.52 crore paid-up capital of the entities.
Under the directive, the DSE and the CSE will be allowed to float highest shares worth around Tk 609.57 crore for their strategic investors considering face value of each share of Tk 10. 

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