The board of directors of Dhaka Stock Exchange has rejected the prices quoted by four entities for the DSE’s shares in their bid to become strategic partner of the demutualised bourse.
At a meeting presided over by DSE chairman Abul Hashem, the bourse’s board last week made the decision, DSE managing director AKM Majedur Rahman told New Age on Sunday.
The bourse will consult with the Bangladesh Securities and Exchange Commission in this regard before taking any further decision, the DSE MD said.
There are clear directions in the Demutualisation Act over the issue and the bourse will follow the act in consultation with the commission, Majedur said.
Under the Exchanges Demutualisation Act, 2013, the BSEC may grant more time to the DSE to find a strategic investor.
If the DSE fails to find any strategic investor for it within the extended deadline, the commission may allow the bourse to issue shares to any other investors as par the process its board determines.
‘Although the bourse has decided not to choose any entity from the interested parties which submitted price quotations for DSE shares, the bourse is yet to finalise its next course of action,’ DSE director Shakil Rizvi told New Age.
‘We were looking for an offer that would be suitable for the bourse in terms of price and value addition to the DSE,’ he said.
None of the entity managed to fulfil the expectation, he said.
Following invitations from the bourse a number of entities had submitted proposals to the bourse.
Of the proposals, Southeast Bank, a local bank, quoted the highest Tk 30 for each share of the bourse, while a consortium led by Sweden-based Brummer & Partners quoted the lowest Tk 19 for each share of the DSE.
Of the rest two bids, one was from One Bank, a local bank, and another one was from a consortium of local entities including LankaBangla Finance, a local non-bank financial institution.
The DSE board showed no interest in the proposals submitted by the local entities as they (board members) were in doubt whether the organisations would be able to give any positive input to the DSE, a DSE board member said.
Inclusion of conditions in the price quotation by Brummer & Partners-led consortium made it tough for the DSE to select the entity as its strategic partner.
World Bank Group’s International Finance Corporation, German development bank KfW, Commonwealth Development Corporation, US-based NASDAQ, and Bangladeshi Square Group are also in the same consortium.
The conditions given by Brummers and Partners were exclusion of DSE’s Nikunja building and fixed deposit worth around Tk 1,200 crore from the bourse’s valuation.
The DSE found that the conditions could not be met as the bourse turned into a Tk 1,800-crore company with those assets and refrained from selecting any of the organisations, the DSE member said.
Although a number of other firms had expressed their interest to be the DSE’s strategic partner, they refrained from submitting price quotations.
The entities expressed their interest following a DSE invitation published in newspapers on October 17 last year that asked interested foreign and local organisations to submit their expression of interest within November 15.
The DSE, the country’s premier bourse, turned into a demutualised stock exchange on November 21, 2013.
On December 9, 2015, the BSEC under the Demutualisation Act, 2013 directed the DSE to get strategic investor within a year. The commission extended the deadline till June 30, 2017 following a prayer from the DSE.
The DSE in the FY 2013-14, the first fiscal year after its demutualisation, made a net profit of Tk 135 crore while its profit was Tk 115.51 crore in FY13.
In FY15 and FY16, the entity’s profit after tax stood at Tk 141.70 crore and Tk 119.82 crore respectively.
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