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Owning a stake in the demutualised Dhaka Stock Exchange (DSE) has suddenly become very important as bids to this effect from two consortiums, one each from China and India, have attracted both national and international attention.
It was not long ago when the DSE management was desperately looking for a potential strategic partner, but could not find one. But the situation has changed suddenly. Strategic rivalries, as interpreted by the international media, have got into an issue that otherwise deserves nothing but financial considerations.
The DSE board of directors decided in favour of the proposal submitted by the consortium comprising Shenzhen Stock Exchange and Shanghai Stock Exchange against the takeover of 25 per cent stake in the country's premier bourse in the middle part of last month. But the alleged attempt to influence the capital market regulatory body, the Bangladesh Securities and Exchange Commission (BSEC), by another consortium led by the National Stock Exchange (NSE) of India to nullify the DSE decision triggered a controversy.
The ongoing developments centring around the selection of a strategic partner in accordance with the provisions of the Stock Exchanges Demutualisation Act, 2013 suggest that the whole process is likely to take more than usual time. But that should not have been the case.
The BSEC on December 09, 2015 directed the DSE to get a strategic partner within a year's time. The time was later extended by another six months to June 30, 2017, following requests from the DSE. However, the deadline got yet another extension for six months by the BSEC with a condition that DSE would sell its stake, as stipulated in the Demutualisation Act, to a strategic partner that would contribute to the development of management, business and technical interests of the bourse. The regulator also reportedly asked the DSE not to select any local company as strategic partner if that lacked the capability of making such contributions. Just because of such a condition, the DSE could not take into cognizance a high-value offer coming from a local non-banking financial institution.
But the situation turned a bit serious when the Transparency International, Bangladesh (TIB) issued a statement alleging 'illegal' intervention in the selection of a strategic partner for the DSE. However, the BSEC dismissed the allegation forthwith while the DSE board staunchly backed its decision favouring its selection of the Chinese strategic partner that has offered Tk 22 for a share having a face value of Tk10 and technical assistance worth US$37 million. The Indian consortium offered Tk15 a share. The latter reportedly wanted to put two of their men on the DSE board in violation of the relevant legal provision.
The BSEC is scrutinising the Chinese proposal and it, as a regulatory body, is legally mandated to do so. It has also sought clarification from the DSE about the Chinese technical offer.
But what is intriguing here is the comment the Finance Minister wrote on a copy of the letter that the Chinese embassy sent to the BSEC seeking its cooperation.
The minister, according to a report published in this paper, questioned the capability of the Chinese consortium to become a strategic partner of DSE. The Shanghai Stock Exchange and the Shenzhen Stock Exchange are two bourses that are operating independently in China having market cap of US$3.5 trillion and US$2.2 trillion respectively. The DSE's market cap is worth $ 320.5 billion. The minister's observation could be interpreted as unnecessary since it is a matter between DSE and BSEC.
There is no denying that the DSE has taken a decision that is attractive, both financially and technically, in the matters of selecting a strategic partner. However, they would have to wait for some more time to get the regulator's nod, it seems.