Singapore Exchange to buy five percent of India's BSE

Singapore Exchange plans to acquire a five percent stake in the Bombay Stock Exchange in a deal worth 42.7 million dollars, the two exchanges announced here on Wednesday.

The deal came after Deutsche Boerse, operator of the Frankfurt stock exchange, last month announced it would pick up five percent of the Mumbai stock exchange at the same price. "This strategic tie-up with SGX (Singapore Exchange) will offer the 'Asian advantage' to BSE," said Bombay Stock Exchange managing director and chief executive Rajnikant Patel. The Mumbai exchange -- Asia's oldest -- still has to sell a further 41 percent to institutional investors in line with an order by the Securities and Exchange Board of India last year to set up a corporate structure.

Patel said other buyers could be exchanges or private equity funds under the demutualisation plan which must be completed by May 19, 2007. The other 49 percent will remain in the hands of broker members of the BSE. "We are talking to various players," Patel said told reporters in Mumbai, India's financial hub. "We expect to meet the deadline and we are talking to several other players."

The Indian government, which issued new guidelines on overseas investment in Indian exchanges at the close of 2006, has capped the stake of individual investors at five percent and limited direct foreign ownership to 26 percent. SGX chief executive Hsieh Fu Hua said the investment in BSE is "consistent with our strategy of building an Asian gateway for securities and derivatives products." Both stock exchanges have also agreed to "actively explore collaboration in various areas relating to listings and product development," they said in a joint statement.

"The Indian financial and capital markets are integrating with global markets. The Asia-Pacific region is emerging as the next area of growth," Patel said. The partnership will take advantage of SGX's role as a regional hub for derivatives and international listings and BSE's strong presence in the giant Indian market, the statement said.

Mumbai's BSE Sensitive index or Sensex is a stock market benchmark in India. SGX was Asia-Pacific's first demutualised securities and derivatives exchange. It listed through a public offer and private placement in November 2000. Earlier this year the New York Stock Exchange, investment bank Goldman Sachs and two other global investors bought 20 percent of India's National Stock Exchange, the country's largest, in separate purchases of five percent each for a total 460 million dollars.