After pocketing a hefty 3000% dividend in 2007-08, shareholders of the Bombay Stock Exchange (BSE) are being treated to some more largesse this time in the form of a bonus issue. According to reliable sources, the BSE board at its meeting on Saturday has decided to offer 12 bonus shares for very share held by shareholders.
Though the bonus issue is in line with brokers’ expectations, the move is seen as the first step towards eventual listing of the exchange’s shares. BSE is required to enhance its capital base significantly from the current level for listing purpose.
Post-bonus, the exchange’s equity capital would increase from the current Rs 78 lakh to Rs 10 crore, which is the limit applicable to companies seeking listing on the National Stock Exchange (NSE). The minimum paid-up capital requirement for BSE listing is Rs 3 crore.
Confirming the bonus issue, a broker shareholder said: “The move is positive in the sense that we are a step closer towards listing. But, we are more concerned about broader issues relating to stock market turmoil and the consequent loss in business, which have badly affected our prospects.”
In the last AGM, shareholders had insisted on speedy listing of BSE’s shares, which has been delayed by several months. The exchange was planning to get its shares listed by the end of the last fiscal. By increasing capital through bonus issue, the corporatised and demutualised exchange would fulfil the listing criteria and would be able to take the process further.
Sources say BSE is looking to list shares with or without initial public offering (IPO). Some brokers feel the cash-rich exchange does not need more funds and so could seek Sebi exemption from floating an IPO. As on March 31 2008, its reserves stood over Rs 1,500 crore, bolstered by equity participation of strategic investors Deutsche Boerse (DB) and Singapore Exchange (SGX) at Rs 5,200 per share. Strengthening its networth was also the exchange’s robust earnings for 2007-08.
The bonus would be offered to broker members and several other non-broker shareholders, which collectively own 51% stake in the BSE. Apart from DB and SGX, the list also includes Indian investors like SBI, LIC, Bajaj Auto and foreigners like Dubai Financial LLC, Atticus Mauritius and Caldwell Asset Management.
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