Two frontrunners for BSE pie

Deutsche Borse and Singapore Stock Exchange (SGX) are seen as front runners for a stake in the Bombay Stock Exchange (BSE).

The other likely bidders are the London Stock Exchange (LSE) and Nasdaq. But since both the exchanges are engaged in a tug-of-war back home with Nasdaq keen to acquire LSE, it is unlikely that they may interested in the BSE for now.

Prior to the 5 per cent ceiling on individual holding, NYSE was considered as a certain partner for the BSE and was said to have done a due diligence.

BSE has to finalise the partner as soon as possible as it wants to complete IPO before May 2007. A strategic partner is expected to give BSE a higher valuation. Going by the valuation that NSE received for its stake sale to NYSE and other three foreign entities, it seems that BSE will get anywhere between $750 million and $1 billion, said an investment banking source.

Deutsche Borse is leading player in derivatives including equities, commodity derivatives and interest rates derivatives. Deutsche's experience will be useful for BSE in developing its derivatives market, also now that it has commenced trading in corporate bonds.

SGX also has good track record and can be a suitable partner for BSE. In the fast developing financial markets, SGX falls under same time zone with BSE and looking from that point, it is likely that Deutsche Borse may get preference, believed the investment banker.

Currently, BSE top brass and merchant bankers are busy in fulfiling formalities related to finding a partner and filing a draft prospectus.

BSE will also have to increase its capital base from the present Rs 70 lakh and is considering a bonus to meet the minimum capital requirements.