BSE meet today on stake selloff

The board of directors of the Bombay Stock Exchange (BSE) will meet tomorrow to take up its proposed equity sale to strategic investors and initial public offering. The bourse has been given a deadline of May 2007 to bring down brokers' stake to 51 per cent.

The BSE has proposed to sell off 26 per cent to strategic investors initially, followed by an IPO to offload 25 per cent.

Sources close to the development do not rule out a possibility of tinkering with the proposal, if a final decision on strategic partners is getting delayed. A possibility is that BSE would sign MoUs with prospective strategic partners before going ahead with the IPO.

"We would sign MoUs with strategic partners by the time we tap the primary market. This will give us better valuation for IPO. Partners would be roped in after the IPO," a source said.

Reportedly, BSE has been in talks with the New York Stock Exchange, London Stock Exchange and Nasdaq.

According to the source, due to time constraints the exchange will be wrapping up a deal soon. If the strategic investment takes place first, valuation of the exchange will get a boost.

The BSE's stake sale is aimed at conforming to the Securities and Exchange Board of India's (Sebi) demutualisation guidelines.

BSE's rival the National Stock Exchange is promoted by leading banks such as ICICI Bank, SBI and Canara Bank and financial institutions such as IFCI and LIC. It has a more professional management and disclosure guidelines.

An alliance with strategic investors will benefit BSE since the bourse will be get to share technology and intelligence.