The consortium will formally be announced as the strategic investor for DSE on Tuesday
The much anticipated strategic partnership agreement between the Dhaka Stock Exchange (DSE) and the Chinese consortium of Shenzhen Stock Exchange and Shanghai Stock Exchange will go into effect from Tuesday.
The DSE authorities will hand over 25% of DSE shares to the consortium on the day. On Monday, the Chinese consortium will pay Tk947 crore to the DSE for the shares. The money will be equally split among 237 DSE shareholders, with each receiving about Tk4 crore.
DSE officials said the consortium will formally be announced as the strategic investor for DSE at a joint press conference to be held at the Pan Pacific Sonargaon Hotel in Dhaka on Tuesday.
DSE Managing Director KAM Majedur Rahman said: “The funds will be deposited in the DSE’s City Bank account, but the shareholders will get their money a little later. The DSE will hold a Board of Directors meeting on September 4, where Xie Wenhai, head of the IT management committee of Shenzhen Stock Exchange, will be officially appointed as a director of the board of DSE.”
Recently, Bangladesh Bank granted the consortium permission to open a fund transfer account. The Non Resident Investors Taka Account (NITA account) was opened with Standard Chartered Bank.
On May 14, 2018, DSE signed a memorandum of understanding with the Chinese consortium to sell 25% of its shares to the group to make it the strategic partner of the bourse.
According to the Share Purchase Agreement (SPA), the consortium will hold 25% - equivalent to 450,944,125 ordinary shares - of DSE at Tk21 each in order to partner with the bourse.
The consortium has also offered about Tk300 crore on top of the initial Tk947 crore, for infrastructural and technological development.
In addition, they have proposed to develop the SME market, assist in product diversification, and jointly operate the V-Next alliance program in Bangladesh.
The National Stock Exchange of India had also attempted to buy a stake, but had a far lower bid than the Chinese.
When the funds from the Chinese consortium are sent to the bank accounts of DSE shareholders from the government account exchequer, a 15% gains tax will be levied on them. However, shareholders have urged the government to exempt the gains tax in the interest of capital market development.
After the stock market crash in 2010, stakeholders demanded that the government ensure monitoring to stop manipulation and bring transparency to the stock market, in order to restore the investors’ confidence.
According to the Stock Exchange Demutualization Act 2013, 40 % of the shares of the DSE were credited to the DSE members’ accounts, while the remaining 60% are kept in a blocked account. After selling 25% of its shares from the blocked account to the strategic investor, the bourse would float the remaining 35% through an initial public offering (IPO).
Experts and stakeholders believe the consortium will help the DSE become a well regulated and technically sound stock market.