The sale of The Baltic Exchange to Singapore Exchange Limited (SGX) was set for final approval by shareholders of the London-based shipping institution in late September, with the 87 mill. £ deal expected to be completed in November
Final details of SGX’s proposed acquisition were published in early August, after the required majority of Baltic shareholders had indicated[ds_preview] they would support the bid and shipbroker »panellists« agreed to continue providing market data. The Baltic management had recommended the bid be accepted, chairman Guy Campbell saying it would »accelerate the growth and development of the Baltic Exchange beyond what it could achieve on its own.«
SGX had previously indicated that it was interested in the Baltic because of its role as a producer of benchmark freight data including a series of indices for the chartering of ships, the most famous being the Baltic Dry Index for bulk carriers. Baltic data also underpins the growing FFA (Forward Freight Agreement) market, an area of maritime-related derivatives where SGX has emerged as the leading clearing house.
Acquiring the Baltic would fit well with Singapore’s role as both a commodities hub and major maritime centre, chief executive Loh Boon Chye had explained on first launching the SGX bid. He has since pledged that the SGX will work with the Baltic »to develop new products, benchmarks and services«. Many observers also see SGX’s move as a »prestige« buy for Singapore, helping the city-state towards its aim of wresting London’s crown as the world’s leading centre for maritime business services.
Since established in 1744 the Baltic has always been a symbol of London’s pivotal role in international commerce, famous for its »fair play« business ethic as enshrined in the Baltic’s motto of »our word our bond«. Times have moved on, however, and after the original Exchange building was destroyed in a 1992 terrorist bomb, the Baltic lost its historic trading floor and struggled to maintain its relevance in the electronic age.
Some analysts were surprised at the high value of SGX’s bid given the Baltic’s net profit figure of only 1.34mill. £ in the year to end-March 2015, but a spokesman for the London-based Exchange pointed to it being »a very interesting investment with a huge potential for synergies.«
The Baltic also owns an impressive headquarters building located at the heart of London’s historic financial district The City, where it also acts as landlord to other shipping tenants such as the International Chamber of Shipping and Greek Shipping Co-operation Committee. SGX has committed to retaining the Baltic’s London headquarters building, as well as its character as a membership organization and existing fees structure for members and data users for at least five years
ED
