SELLING SHARES TO STRATEGIC PARTNER

BSEC presses DSE to pick India’s NSE-led group, not top bidder

Mostafizur Rahman | Published: 23:21, Feb 11,2018

 
 

A file photo shows a man walking past while a security guard stands in front of closed gates of Dhaka Stock Exchange. The Bangladesh Securities and Exchange Commission has been putting huge pressure on the DSE to sell its 25 per cent stake to India’s NSE-led consortium scrapping its (DSE) decision to approve a ‘better’ offer submitted by a Shanghai Stock Exchange-led consortium.— New Age photo

The Bangladesh Securities and Exchange Commission has been putting huge pressure on the Dhaka Stock Exchange to sell its 25 per cent stake to India’s NSE-led consortium scrapping its (DSE) decision to approve a ‘better’ offer submitted by a Shanghai Stock Exchange-led consortium.
The BSEC on Sunday summoned DSE chairman Abul Hashem and managing director KAM Majedur Rahman to convey the BSEC’s ‘displeasure’ over the selection of the Chinese consortium of SSE and Shenzen Stock Exchange by the DSE board of directors, sources in the BSEC said.
The consortium of SZSE and SSE submitted tender offering Tk 22 a share for 25 per cent or 45.09 crore shares (worth Tk 992 crore) of the DSE while the National Stock Exchange-led consortium quoted Tk 15 a share.
The DSE board on Saturday approved the proposal of the Chinese consortium.
After the DSE opened the bids on February 6, the BSEC asked the DSE to consider the proposal submitted by the NSE-led consortium which also includes Nasdaq of the USA and Frontier Bangladesh.
The board, however, found the offer of the Chinese consortium ‘much better’ in terms of price and other technical offers and approved its proposal on Saturday, said a number of DSE directors.
Irked by the DSE board move, the BSEC summoned the DSE top brass and blasted its MD Majedur Rahman at Sunday’s meeting.
Sources in the BSEC said that the commission took the hard line in favour of the NSE-led consortium because of pressure from the government high ups.
A BSEC commissioner is mostly active in favour of the NSE-led consortium.
NSE chief executive officer Vikram Limaye arrived in Dhaka on Sunday and held a series of meetings with government, DSE and BSEC officials to press for the consortium’s case, BSEC officials said.
‘The whole issue (share sales) of the DSE has now become political as the government wants that the DSE makes the NSE-led consortium its partner instead of the Chinese consortium,’ said a director of the DSE.
He said that the BSEC was not giving any logical ground to select the NSE-led consortium.
The DSE was supposed to send the proposal to the commission today that might be delayed following the pressure.
DSE officials and directors, however, are still in favour of the Chinese consortium considering that SSE and SZSE made ‘better’ offer and were the world’s key stock exchanges.
‘We don’t know what will happen in coming days. Even if the NSE-led consortium upgrades its offer to the offer made by the SSE-led consortium, it will be better for the DSE to take SSE-led consortium as partner because of their (stock exchanges) world-wide reputation,’ said the DSE director.
Apart from the ‘higher’ price quoted by the SSE-led consortium, the NSE-led consortium also lags behind in terms of the $37-million worth free technical support for 10 years offered by the SSE-led consortium, he said.
Besides, the NSE-led consortium made no clear proposal on technical support and it wanted two directorship posts in the DSE board with an option to allow it to exit the DSE in five years although the demutualisation rules allow only one directorship post for the strategic partner.
When asked whether there was any pressure from the BSEC, DSE share-holder director Rakibur Rahman declined to comment.
But, he said, ‘We expect that the BSEC will give a decision that would be best for the capital market of Bangladesh and will give priority to the investors’ interest.’
He also said that the Chinese group would provide free technical support for 10 years including trading station, software and technical equipment that would be remarkable for the bourse.
Rakibur said that the bourse hoped that the group would play a key role in developing the Bangladesh’s stock market and presenting the market in the world platform.
BSEC chairman M Khairul Hossain did not respond despite repeated attempts over mobile phone and did not reply to an SMS.
Capital market analyst Mohammad Musa, a professor of business and economics at United International University, told New Age on Sunday that the DSE board of directors ‘has the right to choose their partner analysing best offer as it has become a profitable institution after its demutualisation’.
The regulator should not force the bourse to select the NSE-led consortium as the SSE-led group made ‘better’ offer, he said.
He said the SSE-led group would be the best for the Bangladesh capital market as it has more experiences than the NSE-led group.
Once the strategic partner is approved by the regulator, it will choose its representative-director to fill the reserve position in the board of directors of the DSE that has remained vacant for five years.
SZSE and SSE are among the three bourses of China, other being the Hong Kong Stock Exchange.
According to the demutualisation scheme of the stock exchange, the DSE consists of 180,37,76,500 shares worth Tk 1,803.77 crore in paid-up capital, considering the face value of Tk 10 a share of the entity.

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