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19 February, 2018 00:00 00 AM
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DSE all set to pick Chinese consortium as strategic partner today

Staff Reporter
DSE all set to pick Chinese consortium as strategic partner today

The Dhaka Stock Exchange (DSE) has, in principle, decided to opt for a Chinese bidder to hand out its 25 per cent stake, members of the DSE board told The Independent. A board meeting of the DSE will be held today (Monday) and, at the meeting, the board will approve the minutes of the previous board meeting, which unanimously voted for the Chinese consortium for the stake, said the members.

Before the meeting, investors were shaky, which caused the DSEX index to go down by 99.43 points yesterday (Sunday). Investors said the two stock markets will not be vibrant till a decision is taken on the issue of whether China’s or India’s proposals would be chosen. The Dhaka Stock Exchange–DSE Index continued to fall for the last three working days after some reports appeared, quoting DSE and the Bangladesh Security Exchange Commission (BSEC), that India could be the partner of the DSE, as some policymakers have sought.

“It is clear that till the decision is finalised about the strategic partner, the markets will not be stable,” said Nizam Uddin, a DSE investor.   

This decision is likely to come in the wake of a reported tug-of-war between the bourse and its regulator, the BSEC, which wanted the DSE to settle for the second best—an Indian consortium.

Shakil Rizvi, a DSE director, told The Independent that the holder of a 25 per cent stake of the DSE was selected through a tendering process, and the Chinese consortium—led by the Shanghai Stock Exchange (SSE)—came out as the clear winner.

He said that Demutualization Law approved by Parliament does not have any provision for two “outside strategic partners”. Hence, it has opted for the best bidder, selected through a bidding process.

The DSE is selling a fourth of its stake to foreign bidders as in a demutualized stock exchange, ownership is divided between members and outsiders in order to remove conflicts of interest and advance accountability.

The Chinese consortium, of SSE and Shenzhen Stock Exchange (SZSE), submitted a tender offering Tk. 22 a share for 25 per cent or 45.09 crore shares (worth Tk. 992 crore) of the DSE. SZSE and SSE are among the three bourses of China, the other being the Hong Kong Stock Exchange.

The Indian consortium of NSE, the US-based Nasdaq and Frontier Bangladesh meanwhile quoted Tk. 15 a share, which amounted to Tk. 676 crore for the 25 per cent stake, a significant 47 per cent less than the Chinese offering.

The Chinese consortium also offered free technical support to DSE for 10 years, which itself is worth around Tk. 307 crore. The Indian consortium made no clear-cut

proposal in respect of any technical support. It also wanted two positions of director in the DSE. The demutualization rules permit keeping only one board position for the ‘foreign entity’ owning its 25 per cent.

The Chinese consortium wanted to be a long-term strategic partner, without imposing any

conditions, but the Indian consortium imposed the condition of retrieving its investment after five years.

The Chinese consortium has already garnered necessary approval from all of its local regulators in the country to become the DSE’s strategic partner. In contrast, the Indian consortium has not got the necessary approval from the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI).

Transparency International Bangladesh (TIB) raised concerns on Friday following media reports about influence being exerted by the second-highest bidder and the subsequent move by the regulatory body to select the Indian bidder as the strategic partner of the country's premier bourse.

In a statement, TIB observed that the selection of the second-highest bidder instead of the highest one—without showing any valid reason—would trigger questions, both at home and abroad.

 

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Editor : M. Shamsur Rahman

Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

Editor : M. Shamsur Rahman
Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

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