London, Singapore bourses eye ISE stake

The Inter-connected Stock Exchange of India (ISE), an exchange floated by a group of small exchanges, is fast completing its revival strategy to attract global peers.

According to sources, the London Stock Exchange (LSE), Singapore Stock Exchange (SGX) and some top private equities players have approached the merchant banker appointed by the exchange for valuation and stake sale purposes.

The exchange will soon be presenting a proposal to the Securities and Exchange Board of India (Sebi) about the future plans and product initiatives of the exchange.

Sources said ISE has received an one-year extension to complete the corporatisation till September 15, 2007.

Market watchers said there was a possibility for this to happen as the Sebi plans to provide a third stock exchange platform to investors, especially for small and medium enterprises, which are located in tier-III or tier-IV cities.

A source close to the development said: "We have been approached by some foreign exchanges and private equity players but we are waiting for valuation process of the exchange to be over. Within three to four weeks, the valuation process would be completed by the merchant banker. Our coverage network is very strong and any prospective strategic partner will look at utilising our existing infrastructure and distribution network."

An investment banking source said: "Foreign exchanges and domestic institutions are showing keen interest because of the integration of the stock exchanges and the liquidity factor available for investors."

The ISE Securities & Services (ISS) a subsidiary of ISE, has a paltry Rs 158 crore turnover on a daily basis.

The ISE is promoted by 13 regional stock exchanges, which include bourses from Bangalore, Cochin, Bhubaneshwar, Hyderabad, Jaipur, and Mangalore. ISE has a network that covers nearly 134 cities across 25 states.

New York Stock Exchange recently picked up a stake in the National Stock Exchange, while Bombay Stock Exchange is expected to wrap up a deal with another foreign bourse in the coming months. Under the regulations, a single entity is barred to buy more than 5 per cent stake in an exchange.