Temasek Holdings and the The Government of Singapore Investment Corporation (GIC) are, according to the Today newspaper, reportedly interested in buying equity in 132-year-old Bombay Stock Exchange.

This comes just a month after the Singapore Exchange bought a 5% stake in the it.

It also makes sense for the BSE because having partners in the SGX and Deutsche Börse (which also owns 5% stake in it) would directly benefit them through some collaborative efforts.

So would BSE take on Temasek and GIC as investors?

Probably not.

First, both Temasek and GIC would only inject capital into BSE and not be able to contribute much to it as a business.

Certainly not as much as another financial services player.

And the BSE does not seem like it is in desperate need of money.

If there was one reason it would want to take on Temasek and GIC as investors, it would probably be that BSE wants a direct link to the Singapore government.

Secondly, one of the reasons the maximum investment by each single investor is capped at 5% may be to prevent any one large consortium from holding a major stake in the BSE.

In this case, both Temasek and GIC are Singapore government-linked. Add the SGX into the equation and Singapore Inc might quite possibly own 15% in the BSE.

Considering what Temasek has been through with Thailand recently, that can be quite a risk too.

Thirdly, the cap on foreign direct investment is 26%, so the BSE seems far more likely to bring in peers like the London Stock Exchange, New York Stock Exchange and the Nasdaq.

In light of the above, it is highly unlikely for the BSE to even consider Temasek and GIC as possible investors.

So why would they even bother?

Serene Lim