In an unprecedented move, a consortium consisting of the Shanghai Stock Exchange, Shenzhen Stock Exchange and a Chinese fund has offered the highest bid of 28 rupees ($0.2672) per share to buy a 40 percent stake in the Pakistan Stock Exchange (PSX).
The move is being translated in context China’s Belt and Road Initiative, according to industry insiders.
PSX Managing Director Nadeem Naqvi told media on Thursday ahead of an official announcement of the bids:
“All I can say … is the Chinese consortium is the top bidder.”
At least 17 entities had expressed an interest in the acquisition of PSX, with a benchmark stock index as one of the best performing indices worldwide in 2016, gaining 38pc so far. The PSX is currently owned by more than 300 Pakistani brokers.
Till the announcement made it public, Chinese and British (led by NASDAQ Technology) consortia had been cited as among the prospective buyers.
Mr. Naqvi said 40 percent of the Karachi-based stock exchange represents 320 million shares. That would make the potential deal worth 8.96 billion ($85.5 million) which seems to be a fraction of the earlier estimates offered by analysts to be around $225 million.
If the acquisition sails through successfully, it will be the first time a Chinese stock exchange has bought a stake in a foreign one. It was in January this year that Pakistan Stock Exchange was formed after the merger of the country’s three bourses in Islamabad, Karachi and Lahore.
The speculations of a Chinese acquisition of PSX had been going on since early October this year. However, the delay in submitting the formal bid has been rumored to be a consequence of the Chinese seeking special incentives and continued negotiations with the PSX and its regulator, the Securities and Exchange Commission of Pakistan (SECP).
Pakistan’s stock exchange has recently been approved to be restored to the MSCI Emerging Markets Index, giving it a wider range of potential investors than as a Frontier Market.