Singapore bourse in talks to buy Baltic Exchange

The Singapore Exchange (SGX) is in exclusive talks with the London's Baltic Exchange about buying the centuries-old shipping industry hub, sources said on Wednesday.

The advance talks do not mean a sale is guaranteed, said the sources, who declined to be identified as the news is not public.

The Baltic Exchange and SGX declined to comment.

In late February, the Baltic Exchange confirmed it had received a number of “exploratory approaches” after SGX said it was seeking to buy the London shipping exchange.

The London Metal Exchange, CME Group, ICE, state-run conglomerate China Merchants Group [CNMGP.UL] and Platts were among other potential bidders, the sources said.One source said the potential deal might value Baltic at about $100 million.

Many sectors of the shipping industry, including dry bulk commodities, are struggling with the worst market conditions in decades.

An acquisition of the Baltic Exchange, which was founded in 1744, would give the winner ownership of the shipping industry's benchmark indices and greater access to the multi-billion dollar freight derivatives market. Earlier this month, the Baltic Exchange said any potential buyer of the business would have to provide assurances its central role in shipping would not be undermined.

A purchase by SGX would boost new Chief Executive Loh Boon Chye's plans to diversify its revenue streams at a time when it has been hit by sluggish equity listings and securities volumes.

SGX sees huge long-term potential for freight derivatives and clearing and it has launched new products to increase the appeal of its Asian pricing benchmarks for commodities such as iron ore, liquefied natural gas and coking coal.

A deal would also fit well with Singapore positioning the city-state as a leading hub for financial services, commodities trading and shipping.