MUMBAI; The Bombay Stock Exchange (BSE), Asia’s oldest stock exchange, plans to sell about 26% of its stake to strategic investors, including overseas exchanges, and about 25% to the public, its MD and CEO Rajnikant Patel said on Friday.
The exchange, which has now become a company, has appointed Kotak Mahindra to work out the modalities of the sale and also identify investors, Mr Patel said.
BSE is now a company and its brokers now hold 100% of its equity. As per the corporatisation and demutualisation scheme approved by the Securities and Exchange Board of India (Sebi), BSE members had to bring down their stake to 49% within a year of corporatisation, which was completed in ‘05.
However, the exchange sought a one-year extension from Sebi and based on the revised schedule, it can now complete the demutualisation process by May ‘07.
“We have appointed Kotak Mahindra as a financial advisor to work out modalities for demutualisation of the exchange. We are planning to offer strategic stake to institutions like exchanges, banks, financial institutions or foreign bilateral agencies,” said Mr Patel. He was talking on the occasion of the launch of the Gujarati language website on Friday. The BSE will celebrate the 132nd foundation day on July 9 ‘06.
Mr Patel said that corporates or business groups would not be allowed to hold stakes in the exchange.The demutualisation will take place in two phases. While 26% of brokers’ stake will be diluted in favour of a strategic investor in the current year, about 25% will be offered to the public by May ‘07, said Mr Patel.
Demutualisation of the BSE is aimed at segregating ownership and management of trading rights of members. As a corporatised and demutualised exchange, the BSE is expected to adopt higher levels of corporate governance and effectively address perception issues as to the exchange’s day-to-day management and operations, said brokers.
After running its operations as a trust for 130 years, the BSE was converted into a company. As a corporatised entity, BSE has an initial capital of about Rs 75 lakh.
The exchange has allotted 10,000 shares of Re 1 to each of 750 odd members registered with the exchange. The corporatised BSE has a 12-member governing board, including three broker representatives.
