The Chinese consortium, comprising Shenzhen Stock Exchange and Shanghai Stock Exchange, has finally become the strategic partner of Dhaka Stock Exchange (DSE).
The much-talked-about partnership was formed Monday as two sides struck a share purchase agreement with the objective of further strengthening economic relationship between the two countries.
Wang Jianjun, president and CEO of Shenzhen Stock Exchange, and Pan Xuexian, chair of supervisory of Shanghai Stock Exchange of the Chinese consortium and DSE managing director K A M Majedur Rahman signed the deal.
"It's a red letter day for DSE," said Finance Minister A M A Muhith, who witnessed the signing ceremony as the chief guest.
"We hope this strategic partnership agreement will see the stock exchanges bear good fruit," he said.
"I also think Shenzhen and Shanghai stock exchanges have formed a good partnership with a country, whose capital market is getting organised and strong."
Bangladesh Securities and Exchange Commission (BSEC) Chairman Professor M Khairul Hossain, DSE Chairman Professor Abul Hashem and other top officials of the securities regulator, DSE, and market operators were also present at the deal signing ceremony.
Wang Jianjun in his speech said the friendship between China and Bangladesh dates far back in history and has been time-honoured.
"Today, the cooperation between the two countries is vibrant in diverse fields. China has become Bangladesh's largest trading partner."
He also said China has opened up its door and will never close it. Rather it will become even wider.
"We are deeply impressed by professionalism and commitment of the DSE," he added.
The BSEC chairman said the regulator has brought a lot of reforms in the capital market.
"Now the capital market is transparent and accountable to investors and stakeholders," said Mr Khairul.
The strategic partnership will contribute significantly in the development of the capital market, he added.
The DSE chairman said the bourse started its journey of searching strategic investors in December 2015.
"After a rigorous scrutiny we selected the Chinese consortium as DSE's strategic partner," added Mr Hashem.
As part of the bourse's demutualisation process, the consortium will also fill one post on the DSE board, which has been vacant since the premier bourse became a demutualised entity.
The agreement signing took place following the recent regulatory approval to the Chinese consortium's proposal.
The Chinese consortium earlier offered Tk 22 per share for 25 per cent of the DSE's total shares. But finally the price stood at Tk 21 per share on adjustment of dividend. The consortium also offered technical supports worth nearly $37 million for free.
Another consortium, led by National Stock Exchange of India (NSE), was the second highest bidder for becoming strategic partner. It offered Tk 15 per share for 25.01 per cent of the DSE's total shares.
On February 10, the DSE board of directors approved the Chinese consortium's proposal, as it looked acceptable to them considering both financial and technical aspects.
On February 22, the premier bourse submitted the Chinese consortium's proposal to the securities regulator for approval.
Later, the bid-winning Chinese consortium agreed to exclude and relax some conditions, it had set originally to become the strategic partner of the premier bourse, in response to explanations sought by an appraisal body of the BSEC.
The BSEC body found some conditions of the Chinese consortium 'conflicting' with the relevant law of the land.
On March 20, the securities regulator asked DSE to submit a revised proposal fulfilling five conditions.
The DSE submitted the revised proposal to the BSEC on April 30, taking its shareholders' approval on share purchase agreement as part of fulfilling the regulatory conditions.
On receiving the revised proposal, the regulator finally approved the share purchase agreement on May 3.
The market capitalisation of the Shenzhen-Shanghai consortium is currently about $8.0 trillion. Their combined revenue was $3.0 billion in 2017, and combined profit was $1.6 billion.
As per the DSE demutualisation scheme, approved by the BSEC on September 26, 2013, the bourse's shareholders primarily got 40 per cent of its total stakes along with receiving TREC (trading rights entitlement certificate).
Of the remaining 60 per cent shares, 25 per cent have been kept in block account for strategic investors.
Besides, 35 per cent shares have been set aside for institutional and individual investors, which will be offloaded through initial public offering (IPO).
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