Foreign firms eye stake in BSE Ltd

Temasek, UBS, the Bank of New York, the Government of Singapore Investment Corporation (GSIC) and even the New York Stock Exchange have shown interest in picking up a stake in the corporatised Bombay Stock Exchange (BSE).

The governing board of the bourse on Friday cleared the plan for corporatisation, and the new entity is expected to be formed by the third week of August.

Sources in the know of the development told Business Standard: "BSE representatives have met potential foreign institutions, including overseas exchanges. They have shown interest in picking up stakes in the new entity."

A valuation exercise has already been kicked off and the new corporate entity will follow the model adopted by the Singapore and Malaysian stock exchanges for selling off stakes.

However, the process will take some time. A leading BSE broker said, "Roping in a strategic partner will take some time. An exchange is not regulated like any other corporate entity and anybody will think twice before picking up a stake."

The BSE Ltd will have to ensure that at least 51 per cent of its equity shares are held by public other than shareholders having trading rights.

Within a year of the due date, the new entity will transfer the duties and functions of the clearing house of the BSE Ltd to a clearing corporation.

"The regulation caps one entity's stake at 5 per cent. The idea is to make it a widely held entity. We need to see whether those investors which had earlier shown interest are still keen to pick up stakes after the stipulation," sources said.

According to the scheme, 50 members selected by the governing board of the BSE, called the First Shareholders, will incorporate a public company limited by shares. Each of these shareholders will subscribe to and pay for 10,000 fully paid-up equity shares with a face value of Re 1 each.

Every member, with more than one membership card as on the record date, will be entitled to an additional 10,000 fully paid-up equity shares of Re 1 face value for every additional membership card held by them.

The scheme also provides for the listing of the securities of the BSE on any stock exchange, including itself.