Thomas Caldwell, the brash Canadian broker who once took the New York Stock Exchange by storm by pushing it to go public, has turned up in India with the purchase of a 4-per-cent stake in the Bombay Stock Exchange (BSE).
The deal will see a number of companies under the Caldwell Financial Ltd. umbrella purchase a total of 308,888 shares of the BSE for $43.5-million.
Sixty-one per cent of the shares will go into Urbana Corp., a publicly traded investment firm created by the Caldwell group to invest in public and private exchanges around the world. The rest will be held by the Caldwell Growth Opportunities Trust and other clients of Caldwell's investment and asset management arms.
Thomas Caldwell, chairman of Caldwell Financial, is best known for his lucrative investments in privately held exchanges including the Toronto and New York stock markets, which later transformed themselves from member-owned organizations into publicly listed corporations.
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The value of early stakes in these entities soared when they went public. For example, Mr. Caldwell bought his stakes in the NYSE, called seats, for $1.15-million (U.S.) to $3.75-million before the exchange went public. The implied value of those seats had soared to $5.8-million apiece when the stock hit the public markets.
Caldwell has long been interested in getting a toehold in the rapidly expanding Indian economy, said Brendan Caldwell, chief executive officer of Caldwell Investment Management Ltd. and son of Thomas Caldwell.
A decision by the Indian government early this year to open the ownership of member-owned exchanges to other stakeholders and eventually take them public has paved the way for investors such as the Caldwell group.
“We aren't just talking about the transition from private exchange to a public company, but a multiyear, multidecade transformation of an entire economy at which we expect the Indian exchanges to be at the epicentre,” Brendan Caldwell said. “We believe that exchanges are the best way to participate in whatever is going well in a nation's economy.”
India has a huge, young population and an economic growth rate three times that of Canada, making it a very attractive place to invest, he said.
Other investors have also jumped at the opportunity to invest in the Mumbai-based BSE, oldest and second-largest of about 20 stock exchanges in India. This includes Germany's Deutsche Bourse stock exchange and the Singapore Exchange, which have each acquired the maximum 5-per-cent stake in the BSE allowed by the Indian government.
A handful of hedge funds, whose names have not been disclosed, have also made investments in the exchange.
The BSE is expected to go public within the next two years, but the Caldwell group is likely to remain an investor for many more years or even decades, Brendan Caldwell said.
“This isn't just about the money, it's about helping the exchange to get where it wants to go,” he said.
Caldwell is also looking at similar investments across the globe, and is eyeing exchanges in Japan, Ireland, Eastern and Central Europe and Brazil. Not all are open to outside investment yet, but many are considering it, he said.
Source : Globe and Mail