HDFC Bank buys BSE stake via swap

28 Jun 2010, 0218 hrs IST,ET Bureau

MUMBAI: HDFC Bank, one of leading private sector banks, is learnt to have bought a small stake in the Bombay Stock Exchange (BSE) as part of the share-swap agreement with the stock exchange.

The bank has acquired the stake at Rs 375 per share in lieu of the part of the holding in Central Depository Services (CDSL) that it sold to the BSE recently, according to sources familiar with the development. The exact size of the stake, however, could not be known. An ET query did not elicit any response from BSE.

BSE had acquired a controlling stake in the country’s second-largest depository services provider by buying part of the holdings owned by three banks — HDFC Bank, Bank of Baroda and Bank of India. Of these banks, HDFC Bank is understood to have sold a 7.5% equity in the CDSL. The depository is currently valued at Rs 525-550 crore. The bank has acquired those number of BSE shares whose worth is equivalent to the amount of the CDSL holdings it has sold to the exchange, said sources.

The offer price of Rs 375 is at a premium to the price at which BSE’s unlisted shares are currently trading through off-market transactions. The shares have been quoting at around Rs 340-345 against the ex-bonus price of Rs 400.

The exchange had allotted bonus shares in the ratio of 12:1 to its shareholders, including global stock

exchanges Deutsche Borse and Singapore Exchange, which acquired 5% each at Rs 5,200 per share under the demutualisation scheme completed in May 2007. Apart from these stock exchanges, the list of BSE shareholders includes local financial institutions SBI, LIC, and a host of foreign investors, including Dubai Financial Group, Atticus Mauritius, Acacia Banyan and Caldwell Asset Management.

BSE has acquired a majority stake in CDSL despite strong opposition from the latter’s management. Earlier this year, BSE wanted CDSL to make preferential issue of shares to the exchange to increase its holding in the depository beyond 51%. The depository, however, had rejected the proposal, as some of its shareholders were not in favour of the move.