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Carnegie probe could delay OMX agreement
A snowballing controversy over the involvement of senior Swedish government officials with tainted investment bank D Carn-egie & Co AB, an adviser to the government in the OMX share sale, and the possibility of a counterbid by Qatar, are expected to delay the sale of the Nordic exchange.
- By Babu Das Augustine, Banking Editor
- Published: 00:04 October 7, 2007
Dubai: A snowballing controversy over the involvement of senior Swedish government officials with tainted investment bank D Carn-egie & Co AB, an adviser to the government in the OMX share sale, and the possibility of a counterbid by Qatar, are expected to delay the sale of the Nordic exchange.
Carnegie has been accused of a trading scandal. The bank is advising the government on its disinvestments in companies such as OMX, telecom operator TeliaSonera AB and Nordic banking group Nordea AB, in addition to unlisted companies such as SBAB, real estate group Vasakronan AB and liquor group Vin & Sprit AB.
Borse Dubai, the holding company of Dubai International Financial Exchange, and the US stock exchange Nasdaq have made a $4.9 billion offer for OMX. Borse Dubai currently controls 57.4 million OMX shares, representing 47.6 per cent of the total number of votes.
Qatar Holding last week sought permission from Sweden's financial supervisory authority to increase its shareholding in OMX. While Qatar currently holds 9.98 per cent in OMX, subject to approval by Swedish regulators, it can make an open offer for 100 per cent of the shares in OMX.
"The Carnegie scandal and Qatar's likely bid are expected to delay the completion of the deal. Although the likelihood of the Borse Dubai-Nasdaq combine emerging the winner is much higher than any other offer, the whole process of evaluation, due diligence and a potential counterbid are time consuming," said an investment banker familiar with the situation.
Driven by the possibility of a Qatar bid, OMX shares closed above 286 crowns last week. Any competitive offer above 303 crowns per share could nullify the exclusive agreement Borse Dubai entered with a few institutional investors for the purchase of OMX shares at 265 crowns.
Problems
The problems at Carn-egie began to surface a few months ago when the bank disclosed that it had overestimated its trading profit in certain derivatives contracts by 630 million crowns from 2005 to 2007. The Swedish regulator issued its report on practices at Carnegie on September 27, exposing a scandal.
Carnegie has been fined 50 million crowns and is facing an investigation to determine whether it broke trading rules.
Although it is not directly involved in the OMX sale process, it has been an adviser to the government, and to that extent the Social Democrat opposition has demanded that the proceedings be put on hold.
However, investment bankers close to the sale process said it would not have a major impact on the OMX sale process except that it might cause some delays.
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