UK-based financial daily Financial Times on Tuesday had reported that Soros is in advanced talks to buy Dubai Holdings 4% stake in the BSE. Dubai Holding is owned by the Emirates ruler Sheikh Mohammed bin Rashid al-Maktoum. A BSE spokesperson declined comment.
Citing people close to the development, the newspaper said Soros Fund Management is about to pay $40 million (Rs 187 crore on Wednesdays rupee closing) for the stake, valuing the bourse at $1 billion (Rs 4,676 crore).
At these valuations, BSE would be valued at 22 times its 2010 earnings and 2.5 times its book value.
The deal, if it goes through, will be close on heels of a similar deal struck between Temasek Holdings and rival stock exchange National Stock Exchange (NSE) at slightly higher valuations.
In May, Singapore-based sovereign wealth fund Temasek Holdings had acquired NYSE Euronexts 5% in the National Stock Exchange for over $145 million (Rs 675 crore) valuing the exchange at over Rs 13,500 crore.
It valued the company then at 26 times its 2009 earnings.
George Soros interest in the oldest bourse in Asia highlights the growing interest amongst foreign investors to own a pie of Indias exchanges.
The fact that Indian exchanges are the most profitable in terms of net profit margins makes them a bigger investment candidate.
For the financial year ended March 31, 2010, the Bombay Stock Exchange reported a net profit of Rs 212 crore on a sales figure of Rs 464 crore.