Business
Deutsche Borse picks stake in BSE http://www.ndtvprofit.com/homepage/storybusinessnew.asp?template=&whichstory=n&id=36389
Ashwin Punnen
Wednesday, February 14, 2007 (Mumbai):
BSE is learning to make profit from its global reach and after months of deliberations, the exchange has sold a part of its equity to Germany's Deutsche Borse.
Deutsche Borse paid around $45 million to pick up five per cent stake in the BSE and that values the Bombay Stock Exchange at $910 million at a price of Rs 5,200 per share.
BSE will be issuing fresh shares to German stock exchange. Though BSE is smaller, the valuation is quite close to NSE's $1.2 billion valuation last month.
Deutsche Borse that operates the Frankfurt stock exchange brings years of F&O experience to the table, something that the BSE lacks.
"Deutsche Bourse has presence in all the segment that BSE has. They are big players in fixed income and derivatives. We believe that lot of value could be derived from the alliances," said Rajnikant Patel, MD & CEO, BSE.
"We want to do co-operation and collaboration in all forms. We are open to bring in know-how, skill and technology in the sense that we can have a win-win situation," said Reto Francioni, CEO, Deutsche Borse AG.
Through this deal BSE may have divested five per cent stake but they will do more.
Shedding equity
BSE will have to reduce brokers holding in BSE from below 50 per cent from the current 100 per cent by May 15, 2007.
It is looking at various options including offer for sale to public and divestment to more financial investors.
"We are in the process of meeting the deadline and we are looking at various options including strategic sale and public issue," added Patel.
It was a big day for the Asia's oldest stock exchange as it has roped in one of the largest stock exchanges in Europe by offering five per cent stake.
BSE official feel that there is a huge synergy between the two exchanges as BSE could use the German exchange's expertise in areas like derivatives and fixed income market.
Also now the pressure is building up on BSE to bring down the broker's stake below 50 per cent and Rajnikant Patel will have to move fast to meet that May 15 deadline.