The Bombay Stock Exchange (BSE) is expanding its paid-up capital by about six per cent. The intent is to bring in a strategic investor, to whom the shares can be allotted on a preferential basis.
The board of the stock exchange which met in Mumbai today approved the move, which will entail issuing 6.5 million fresh shares. The shares would be allotted at a price between Rs 360 and Rs 400, valuing the exchange at Rs 3,500-4,000 crore, executives said. At the end of March 2009, BSE’s paid-up capital was Rs 10.24 crore.
Already, Deutsche Borse AG and Singapore Stock Exchange are shareholders in the exchange and more players are in the fray to acquire stakes.
In recent months, there has been heightened investor interest in the exchange which is no longer seen as a laggard in the market. The new management has tried to rejuvenate it and has seen an increase in market share through changes in the derivative cycle, the launch of a mutual fund trading platform and technological upgradation. BSE now accounts for 28 per cent market share compared to 25 per cent a year ago.
Apart from the issue of fresh shares, the board has approved offering up to 5 per cent under the employee stock option scheme. The decision will be implemented immediately, the executives said.
Besides, it has recommended the renomination of Andreas Preuss, deputy CEO of Deutsche Borse and CEO of the derivatives exchange, Eurex, on the board. Stock broker Uttam Baggri has been recommended for appointment as the trading member-director. He will replace Prakash Kacholia of Emkay Global Financial Services.
Ishaat Hussain of Tata Sons, whose term is coming to an end, has opted against re-appointment, while Kacholia is not eligible for re-election. Hussain has opted out as another Tata veteran S Ramadorai was recently made chairman of the BSE board.
