Dhaka Stock Exchange greenlights China bourses as strategic partners as India, US lose out

The Dhaka Stock Exchange Limited has given the final go-ahead to a consortium of two Chinese bourses to become strategic partners with 25 percent stakes in the company.

Bangladesh’s premier bourse is trying to lure foreign investment as part of its demutualisation process to get technical and technological support from the strategic partners to further modernise the exchange.

DSE Managing Director KAM Majedur Rahman told reporters on Monday afternoon they gave the final nod to the proposal by the consortium of Shenzhen Stock Exchange and Shanghai Stock Exchange at a meeting of the board held earlier in the day.

He said they would ‘soon’ send the proposal to the regulators, the Securities and Exchange Commission or SEC, for endorsement. 

Shanghai and Shenzhen stock exchanges are among the top bourses in the world boasting $3.5 trillion and $2.2 trillion market capital, respectively.

The market capital of the DSE is over Tk 4.28 trillion or $51.42 billion.

According to the 2013 demutualisation scheme, 25 percent of the 1.8 billion shares of the Dhaka Stock Exchange Limited will be sold to strategic partners, 35 percent to small investors while 40 percent will be with the Trading Right Entitlement Certificate or TREC holders.

Another consortium of India’s National Stock Exchange, Frontier Bangladesh and Nasdaq stock market of the US took part in the bidding to become the DSE’s partners.

According to officials, the Chinese consortium has proposed buying 25 percent stakes into the DSE for Tk 9.9 billion at Tk 22 per share.

In its proposal, the consortium has also mentioned it will spend over Tk 3 billion to give the DSE a technological upgrade.

A DSE official earlier said the other consortium offered Tk 15 per share to buy 25.1 percent shares of the DSE.

It also said it would provide technological help, but did not specify the fund it planned to commit to that end.

On Feb 10, the DSE directors decided to accept the Chinese consortium’s proposal as it looked acceptable to them considering financial and technological aspects.

Speculations swirled in the capital market last week over the DSE bid to get partners, pulling share prices down.

Several media have reported the SEC had ordered the DSE to review its decision on the issue.

Later, Transparency International, Bangladesh or TIB in a statement citing media reports said it was concerned at the ‘illegal interference’ with the DSE decision.

But the SEC said the anti-graft organisation should not comment without checking the credibility of news reports.