India and China, two economic giants, are in a race to buy 25 percent ownership of the Dhaka Stock Exchange.
A consortium of the Shanghai Stock Exchange and the Shenzhen Stock Exchange has proposed to purchase 45 crore shares of the DSE at the rate of Tk 22.
It will also provide technical support of $37 million, which is about Tk 300 crore, to the stock exchange. The consortium demanded a directorship at the DSE board, but did not ask any return on its investment for 10 years.
Another consortium, led by the National Stock Exchange of India, has offered Tk 15 for each share. The NSE has partnerships with American Nasdaq and a private equity fund Frontier Fund Bangladesh.
In the proposal, the NSE said it wanted to provide technical support to the DSE, but it did not mention the monetary value.
The NSE also demanded two directorships at the board and exit opportunity after five years.
As the Chinese party's bidding price is nearly 47 percent higher than that of the Indian one, the DSE approved the Chinese proposal at its board meeting on Saturday.
But the share market regulator, Bangladesh Securities and Exchange Commission declined to give the work order a go ahead and asked the DSE to further scrutinize the proposals, said sources at the stock exchange.
In the meantime, the Indian side, anticipating that the Chinese consortium might win the work order, has started lobbying the DSE and BSEC to get the job.
Vikram Limaye, managing director and CEO of NSE, has suddenly arrived in Dhaka on Sunday to discuss the issue with authorities concerned, said BSEC sources.
On that day, he had two separate meetings with the management of DSE and BSEC. He proposed both the authorities to accept their investment proposal claiming that though their offer price was lower than that of the Chinese, they were more experienced in stock exchange development, according to a BSEC official.
On the other hand, soon after meeting with Limaye, the BSEC authorities called the management of the DSE and advised them to scrutinise both proposals again.
The country's premier bourse has taken the initiative to include strategic partners in it to get modern technological facilities, and services for management and business development as part of its demutualisation scheme taken in 2013. The move separated the bourse's management from ownership.
According to the 2013 demutualisation scheme, 25 percent of the 180 crore shares of the DSE will be sold to strategic partners, 35 percent to small investors and 40 percent will be with the Trading Right Entitlement Certificate or TREC holders.
“We will select the investor who will be more appropriate for development of our stock exchange” said KAM Majedur Rahman, managing director of DSE.
A board meeting will be called soon in this regard, he said.
The DSE board had approved the Chinese proposal as per bidding rule, said a member of the bourse on condition of anonymity.
Quoting the tender rules, he said though BSEC advised to further scrutinize the proposals, there is no scope to accept the proposal that offered lower price.
It is mandatory that the DSE has to sell shares to strategic partners within five years of demutualisation, according to the act.
In June last year, the DSE called tender for the first time and received an investment proposal from local investor.
LankaBangla Finance in partnership with Delta Life Insurance had proposed more than Tk 30 for each share of DSE. But the board did not accept the proposal as they were interested to take foreign investors as strategic partners considering their technical knowledge and experience, according to a DSE source.