LAHORE: Leading brokerages and investors in the country believe the acquisition of Pakistan Stock Exchange by a Chinese consortium in January 2017 for $85 million was at a discount in comparison to its purchase of Dhaka Stock Exchange last week.
A Chinese consortium outlasted competition from India’s National Stock Exchange to acquire 1.8 billion shares of Dhaka Stock Exchange last week for $122 million.
This acquisition has drawn comparisons to a similar deal clinched for acquisition of Pakistan Stock Exchange in early 2017 and has left stock-brokers and brokerage houses wondering if Pakistan was “short-changed” in this deal, reported Dawn.
Although the bidders for the DSE, included two joint bidders Shanghai and Shenzhen Stock Exchange who also were party to the acquisition of PSX in January 2017.
The syndicate which bid and acquired PSX included Chinese Financial Futures Exchange Company, Shanghai Stock Exchange, Shenzhen Stock Exchange and two domestic partners.
According to reports, the Chinese consortium is said to have offered to sacrifice profits on their investments during the first ten years.
Ironically, the Chinese have four directors on the PSX compared to only one on the Dhaka Stock Exchange.
PSX divestment committee, Shehzad Chamdia who negotiated the PSX deal with the Chinese believes the deal wasn’t a discount because the volume of trade, profitability and size of DSE was much more than our stock market.
He highlighted the investors in DSE stood at 2.5 million, which was 10 times the number of investors in PSX.
Brokerage house Insight Securities calculations however suggest the rupee was valued at 104.80 to a dollar when PSX was purchased at end-December 2016 against the Bangladeshi currency taka which stood stable at 83.5 to dollar on Feb 20th, 2018 when the DSE deal was inked.
As per this estimate, the DSE valuation was around $488 million, whereas PSX valuation was less than half, at $213 million.
According to MCB-Arif Habib Savings and Investments Ltd, vice chairman Nasim Beg the Chinese strategy was to acquire, and the price paid was peanuts for them.
He added the Chinese were bellicose bidders in case of DSE.
