The talks relating to buying of Baltic Exchange by Singapore Exchange Ltd, which is a hub of global shipping market, was aimed at shoring up the South East Asian exchange operators derivatives business. SGX has also submitted a non-binding bid for acquisition of the Baltic. These discussions were all preliminary and has not come to any closing stage.
Many potential bidders declined to comment and Baltic Exchange is also unclear about the talks. The deal would be the first major investment by SGX, to revive the company that is strong in products and which struggled to attract initial large public offerings and generate significant daily stock turn over. For Singapore, aiming at new ways to cement the country’s position as a maritime hub is vital. The deal of SGX’s is the most high profile deal and will complement SGX’s current derivatives business particularly freight derivatives.
The shipping market currently struggles with overcapacity and sluggish global trade, but the Baltic has carved an industry leading position in freight derivatives through its Baltex platforms too. The Baltic exchange is valued at three times of its net asset value or about 84 million pounds.
SGX was working with investment bank Jefferies on the potential deal, however both declined to comment. The Baltic produces bench market rates daily and this guides across world to trade and settle freight contract.
Japan’s biggest investment bank Nomura Holdings Inc had been the Baltic’s adviser for a possible sale, but Nomura refused to comment. There is a source of information, that there had been contact between Baltic (owned by around 380 shareholders and many from the shipping industry) and London Stock Exchange, which has a majority stake in clearing house LCH.
This is unlikely to progress given for the possible merger between Deutsche Boerse and the LSE. T he Baltic initially rebuffed its approaches from the LME.
Source: Reuters
