PSE to sell stake in Securities arm

The Pune Stock Exchange (PSE) has decided to sell its 56.94 per cent equity stake in PSE Securities, a broking company floated by it with some city-based brokers six years ago.

The proposed stake-sale is a precursor to the demutualisation of the stock exchange, which is slated later this year, Manish Rangari, the managing director of PSE told the Business Standard. PSE has been virtually defunct for the last few years.

The birth of PSE Securities runs parallel to the fall in trading volumes on the PSE and imposition of regulatory measures in the late nineties and early part of this decade.

Most broker members of the PSE became brokers of the Bombay Stock Exchange and the National Stock Exchange in the wake of on-line trading introduced nationally. Moreover, PSE joined hands with some broker members to form PSE Securities, which operates as a member of the NSE.

Rangari said the broking firm is doing fairly well and is expected to unlock substantial value ahead of the demutualisation of PSE. PSE Securities has 133 sub-brokers, with 18,000 registered clients and more than 5000 beneficiary accounts.

After the stake sale, PSE Securities will no longer be a subsidiary of PSE and the new majority stake holder will get a ready base of clients and an opportunity to deal in the latest stock market instruments such as derivatives and options, Rangari indicated.

The paid-up capital of PSE Securities is Rs 7.06 crore, in which PSE holds 56.94 per cent (Rs 4.02 crore) and other minority shareholders hold the remaining 43.06 per cent (Rs 3.03 crore).

"The proceeds from the stake sale will appear on the balance sheet of PSE and improve valuations at the time of its demutualisation," Rangari said.

The bidders for the stake will have to file their offers by June 11 and the selection of the successful bidder will be finalised by June 30, Rangari said.

The top four or five bidders will be invited for discussions before a final decision is taken, he added. The bidders will be provided with necessary documents such as balance sheets and cash-flow statements of PSE Securities.

"There will be no reserve price, but the board of PSE Securities will have the right to reject all bids if the offer is not satisfactory," Rangari said.

The demutualisation process of PSE is expected to start by August 29 this year. The stake sale in PSE Securities will be complete by then.