The global linking up of exchanges continued today with an announcement that Deutsche Boerse has signed a definitive agreement to buy a 5% stake in the Bombay Stock Exchange.

The German exchange will pay about US$42.7 million for the stake, valuing the whole firm at US$854 million. The firms also agree to explore opportunities to grow the respective exchanges, introduce more cutting edge products in the markets and assist each other in promotional activities in both markets.

The issue of shares is subject to relevant regulatory and shareholder approvals. Kotak Investment Banking advised BSE on the transaction.

“We are delighted to be partnering with Deutsche Boerse. The alliance is of long-term strategic importance designed to achieve several objectives in multiple asset classes in which we found Deutsche Boerse to be very strong,” said BSE managing director and CEO, Rajnikant Patel. “This transaction is an important step for BSE towards realising its mission to ‘Emerge as the premier Indian stock exchange by establishing global benchmarks’. In terms of business, profitability and market capitalization, Deutsche Boerse ranks among the top exchanges of the world. This is a firm beginning towards bringing the global markets to India.”

“The strategic partnership with BSE is a very important step for us towards expanding Deutsche Boerse’s activities in Asia. We see the exchange business becoming increasing global and this partnership is our joint effort to benefit from each other’s strengths while establishing a presence in multiple time zones and regulatory environments,” said Deutsche Boerse CEO, Reto Francioni.

Ulrich Becker, managing director corporate development and in-charge for building out Deutsche Boerse’s Asian business said, “We see India as one of our key growth areas. We look forward to a long and mutually beneficial alliance with BSE to tap the enormous potential in the Indian and Asian markets. Our strong technology, product portfolio and global customer network combined with BSE’s strong presence and brand name in India will help us work together to grow our business significantly.”