POST TIME: 13 February, 2018 12:48:20 AM / LAST MODIFIED: 13 February, 2018 12:00:40 PM
DSE, BSEC face off over bidder selection

DSE, BSEC face off over bidder selection

The Dhaka Stock Exchange (DSE) has locked horns with its regulator, Bangladesh Security and Exchange Commission (BSEC), over the sale of a combined 25 per cent stake to Chinese and Indian bidders. While the bourse opted for the best bidder—a Chinese consortium led by the Shanghai Stock Exchange (SSE)—the regulator apparently wanted the DSE to settle for the second best, an Indian consortium led by its National Stock Exchange (NSE).

As per the rules of demutualisation, the DSE is selling one-fourth of its stakes to foreign bidders, as in a demutualised stock exchange the ownership is divided between members and outsiders to remove conflicts of interest and advancing accountability.

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 a face value of Tk. 10 a share of the entity.

The Chinese consortium of the SSE and the Shenzhen Stock Exchange (SZSE) submitted a tender by offering Tk. 22 a share for 25 per cent or 45.09 crore shares (worth Tk. 992 crore) of the DSE. SZSE and SSE are among the three bourses of China, the other being the Hong Kong Stock Exchange.

Indian consortium NSE, Nasdaq of the USA and Frontier

Bangladesh, meanwhile, quoted Tk. 15 a share, amounting to Tk. 676 crore for the 25 per cent stake, which is a significant 47 per cent less than the Chinese offer. The Chinese consortium also offered a free technical support to the DSE for 10 years—it is worth around Tk. 307 crore.

The Indian consortium, on the other hand, made no clear-cut proposal of any technical support. It also wanted two positions of director in the DSE.

The demutualisation rules allow keeping only one board position for the ‘foreign entity’ owning 25 per cent. Talking to The Independent, Zahirul Islam, a member of the DSE board, said the Chinese consortium was “unanimously selected by all the DSE board members”.

Islam said the offer made by the Chinese clearly surpassed—both in terms of financial gain and technical improvement—other bidders including the NSE-led consortium. When asked “why then the regulator is arguing in favour of the Indian consortium”, Islam said he is not aware of “any such persuasion by the BSEC”.

Sources in the DSE, however, told The Independent that top officials of the DSE and BSEC held a meeting on Sunday afternoon to discuss the selection of the bidder for the DSE’s 25 per cent stakes. The meeting was held after DSE managing director KM Mazedur Rahman held talks with Vikram Limaye, chief executive officer (CEO) of the NSE.

The Independent has learnt from various sources that Limaye arrived in Dhaka on Sunday and has met several government high-ups since then.

The meeting between Limaye and Rahman did not end on a sound note, sources said.

The meeting of Dr Khailrul Hossain, chairman of the BSEC, DSE chairman Abul Hashem and MD Mazedur Rahman also did not produce any fruitful result, sources added.

A DSE source told The Independent that the BSEC had asked the DSE to reconsider selling its stake to the Chinese consortium. It was not clear on what ground the regulator made that suggestion, but the source said the Indian consortium had offered equalling the offer of the Chinese consortium.

It was, however, a tendering process and the Chinese company was a “clear winner”, said the DSE source.

The Independent tried contacting the DSE managing director and the BSEC chairman yesterday afternoon, but found their phones switched off.