Sebi squashes private takeovers of bourses

Kar added, ‘‘The issue of equity to the public through an IPO issue precludes any private placement and Sebi is in the process of framing regulations for any other form of dilution.’’

In other words, any attempt by a set of brokers to take control of stock exchanges under cover of the demutualization would be against the prescribed rules.

The market regulator approved and notified DSE’s scheme of demutualisation on August 29, 2005, within a year of which 51 per cent of the exchange ownership should pass to non-brokers.

Around that time, DSE invited a couple of merchant bankers including SREI International Finance, to make presentations on attracting strategic investors.

Then, the merchant banking outfit of Mumbai-based brokerage firm, Khandwala Securities, made a bid of Rs 40 crore for buying a 51 per cent stake in the exchange, on behalf of a ‘set of investors.’

A DSE board member told The Indian Express, ‘‘Regional exchanges like ours can only hope for a resurgence if we get a strategic investor or a venture capitalist with a good management vision for the exchange. We can’t have an IPO without an operating business.’’

There are over 3,000 companies listed on the DSE, of which 1,813 are listed exclusively with the exchange. These companies bring in listing fees of Rs 6 crore each year. DSE also has a healthy balance sheet, with close to Rs 88 crore in reserves (Rs 77 crore of which is held in cash and bank balances). ‘‘We are just laying the groundwork and these discussions have been informal. The members have to officially permit the board to invite bids from strategic investors, at the annual general meeting next month. Only then will an ad be put out and merchant bankers appointed,’’ a board member said.