OSLO Mar 16, 2007 (Dow Jones Newswires)
Norwegian exchange operator Oslo Bors Holding ASA (OSLO.NO) is firm in its intention to remain independent as a wave of consolidation sweeps the global exchange industry, chief executive Bente Landsnes said Friday.
In an interview with Dow Jones Newswires, Landsnes said the Bors doesn't intend to become part of Nordic stock exchange operation OMX AB (OMX.SK), preferring to remain independent and focus on its strongest sectors, oil, shipping and the fishing industry.
"We're not planning to start buying other exchanges or be part of a merger with OMX. That would take away our flexibility and ability to make business decisions," Landsnes said.
"In our strategy, we've decided the important things for this market place are to focus on our customers and our strongest sectors and to be competitive." Remaining independent is the best way to achieve those aims, Landsnes said.
The exchange is holding out for independence amid a slew of bids and mergers in the sector. U.S.-based Nasdaq Stock Market Inc. (NDAQ) recently made a failed bid to take over the London Stock Exchange PLC (LSE.LN), while the NYSE Group Inc. (NYX) and pan-European exchange Euronext (29064.AE) are set to merge their operations. And in latest developments, on Thursday Intercontinental Exchange Inc. (ICE) proposed a $9.9 billion merger with CBOT Holdings Inc. (BOT), the parent of the Chicago Board of Trade.
At home, OMX has shown its voracious appetite for acquisition, buying up all the Nordic stock exchanges with the exception of Norway's, and moving rapidly into Eastern Europe.
OMX has repeatedly asked the Norwegian Bors to come on board, but has had to make do with the 10% stake it bought last October. Regulation dictates that Oslo Bors shareholders can't hold more than 10%.
"We have the confidence of the market, the different industries here, the analysts and lawyers surrounding the marketplace, it's been very successful," Landsnes said of the Bors.
She added that while it's not interested in mergers or acquisitions, that does not preclude the Bors from close cooperation with other regional exchanges, including OMX, under the NOREX alliance through which it shares trading systems.
Testament to its success, traded volumes over the Bors increased 60-70% in 2006 compared with 2005, and in 2007 to date, volumes are up 40% on the year.
Still, skeptics say the Bors has benefited from historically high oil prices - oil is a lynchpin of the Norwegian economy and the Bors' listings include oil giants Statoil (STO) and Norsk Hydro (STO).
Landsnes conceded that a significant depreciation in oil prices will inevitably have an impact on certain stocks, but concluded: "It will be business as usual. We're not dependent on $60 a barrel oil, at $30 a barrel we lived perfectly well.
"All exchanges depend on something, whether it's Nokia in Finland, or Erikkson and the IT sector in Sweden. An oil price fall won't have any greater impact one way or the other than a collapse in the telecommunications or technology sectors would have in other places," she said.
Meanwhile, the growing strength of non-oil stocks, particularly shipping and fishing, together with the strong growth of renewable energy companies, could help to offset any negative impact of an oil price fall.
"We're seeing the early beginning of a lot of alternative companies, like the Oslo-listed Renewable Energy Corporation (REC.OS)," Landsnes said. "I do believe there will be a balance. If the world doesn't want to be dependent on oil in the future, it looks for alternatives. There are a number of initiatives here in Norway, 10 or 15 companies focussed on alternative energy," she noted.
As Norway's economy booms, it's an attractive place for international investors. Of its just over 230 issuers, 31 are international companies, from locations as diverse as Peru and Canada, and 40% of investors on the exchange are from outside Norway.
"They're attracted by the strong economy and the energy sector, but when they're here, they're interested in companies from other sectors," Landsnes said.
"There are plenty of international investors and issuers, particularly from the U.K. and U.S. markets, and a recent jump in the interest from Canada following five Canadian listings," Landnes said. It's also seeing increased interest from Southeast Asian markets, and a Bors capital markets day in Tokyo this week saw a marked increase in the number of participants, the Bors said.
Oslo Bors expects to see more than 40 new listings in the coming months. Around half of these will be oil or oil services companies, and the other half operating in a mixture of sectors including internet technology, biotechnology and fisheries.
The looming completion of Statoil's $30 billion acquisition of rival Norsk Hydro's oil and gas assets has not created any concerns in the marketplace. "It's still in progress, it's an interesting shift, and Hydro will still be listed" as a stand-alone aluminum company Landsnes said. "We don't know yet whether that might attract more metals and mining stocks," she said.
To cater for Norway's burgeoning economy and the increased number of startups and small companies, in May the Bors is launching Oslo Axess.
"It's to present a marketplace for companies which are not mature enough to be listed at the full exchange, or who don't fully comply with the regulations of the Bors," Landsnes said.
Oslo Axess will be positioned between the over-the-counter, or OTC, and exchange markets. "There will be less demands on the companies listed there, but it will be fully regulated and have the same surveillance as at the exchange," she said.
It is likely to attract startups who can't fully comply with the Bors' stipulation that issuers must have been in operation for at least 3 years, for example.
The Bors is working on a range of other new value added products to bolt onto its strongest industry sectors. It owns a 10% stake in new Norwegian fish exchange Fishex, based in Tromso, northern Norway which is due to start up in a few weeks time. "There are things in the pipeline, though they're still on paper at this stage," she added.
Oslo Bors' biggest shareholder is DNB Nor ASA (DNBNOR.OS), with a 19.67% holding that will be cut to 10% later this year in line with government regulations. OMX holds 10%, Fidelity Fund (FFIDX) 10%, KLP Forsikring 9.76%, Norsk Hydros Pensjon 8.31% and Orkla ASA (ORK.OS) 5.01%.
Copyright (c) 2007 Dow Jones & Company, Inc.
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