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DSE endorses Chinese consortium as strategic partner

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FT ONLINE

The board of directors of the Dhaka Stock Exchange (DSE) has approved the proposal coming from a consortium of two Chinese stock exchanges – Shenzhen Stock Exchange and Shanghai Stock Exchange to be a strategic partner of the country’s premier bourse.

The approval came at a meeting of the DSE board of directors at its board room on Saturday, presided over by its chairman Professor Dr. Abul Hashem.

“The board has unanimously approved the financial and technical proposals of the consortium of Shenzhen Stock Exchange and Shanghai Stock Exchange to become a strategic partner of the premier bourse, as it offered the highest price coupled with technical support,” said a DSE director, present at the meeting.

He said DSE will send the proposal to the Bangladesh Securities and Exchange Commission (BSEC) within a couple of days for final approval.

The Chinese consortium has offered Tk 22 per share for the 25 per cent or 450.9 million shares of the DSE’s total shares. The consortium has also offered technical support worth US$ 37 million to DSE when the bourse opened tender for strategic partner three months ago. The face value of DSE share is Tk 10 each.

According to the demutualisation scheme of the stock exchange, DSE has more than 1.80 billion shares with a paid-up capital of Tk 18.03 billion.

Out of the total shares, 25 per cent or more than 450 million will be sold to the strategic partner. So, the premier bourse is going to receive Tk 9.92 billion by selling these shares.

“Foreign and local investors will be more confident of DSE when the Shanghai and Shenzhen exchanges will be in a strategic alliance with the Dhaka bourse,” the DSE director opined.

On Tuesday, most of the members of the DSE board agreed in principle to accept the proposal of the Chinese consortium, as the exchanges concerned have the experience of stock exchange investment and also offered the highest price along with technical support.

Another consortium, comprising firms from India, Bangladesh and the US, submitted a proposal of Tk 15 for each share of DSE. They also offered technical support, but its worth is less than that of the Chinese consortium, the DSE director said.

After becoming the strategic partner of DSE by holding 25 per cent shares, the Chinese consortium will also hold a position in the 13-member board of the exchange in line with the demutualisation process, according to him.

As per the demutualisation scheme, in the 13-member board of the bourse, seven are independent directors, four shareholder directors, one from strategic investors’ category, and the bourse’s managing director.

The demutualisation scheme was approved by BSEC on September 26, 2013, in which the DSE shareholders primarily got 40 per cent of the stakes along with receiving TREC (trading rights entitlement certificate).

Of the rest 60 per cent shares of the bourse, 25 per cent shares have been kept in block account for strategic investors. Besides, 35 per cent shares have been set aside for institutional and individual investors, which will be offloaded through initial public offering (IPO).

During the last five years, the BSEC has repeatedly extended the deadline to find out strategic investors, and the commission for the last time gave the bourse a four-month time extension that ends on March 8.

-SAM

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