The Bombay Stock Exchange governing board is meeting over the next couple of days to select a strategic partner.
Also on its agenda is the process of separating trading rights from ownership whereby member-brokers will reduce their stake in the exchange from 100 per cent to 49 per cent.
According to current indications, the Deutsche bourse is the frontrunner to pick up 5 per cent stake in Asia's oldest exchange. The Singapore Exchange too is interested in BSE and has officially declared its intention earlier.
Currently, the issue at stake is the valuation of BSE. Sebi has ruled that a single entity cannot hold more than 5 per cent equity in an exchange.
Hence, merchant bankers are floating two options for BSE - one is to select a single overseas exchange as a strategic partner and rope in private equity funds as happened in the case of NSE.
The other option is to accommodate two overseas exchanges. In that case, it will be Deutsche bourse and SGX.
Since the valuation being offered is not sufficient, the board is most likely to authorise investment bankers to negotiate with prospective investors to get an acceptable valuation.
Meanwhile, Nasdaq too is making its interest known in having a stake in BSE but its battle back home with the London Stock Exchange may act as a hurdle.
Meanwhile, the BSE board is also expected to give final touches to the draft prospectus and other regulatory requirements.
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