Hong Kong Exchanges and Clearing, operator of the local stock market, is among the bidders lining up to buy the London Metal Exchange as part of a plan to expand into commodities trading, according to two people familiar with the situation.
'The HKEx has been very successful in equities trading but it has to go beyond equities. A takeover of the London Metal Exchange would suit its plans to expand into commodities trading,' one of the sources told the South China Morning Post.
HKEx chief executive Charles Li Xiaojia said last month the bourse wanted to go beyond its current core business of initial public offerings and equities trading. The next expansion plan would be to launch yuan-denominated commodities futures trading, and Li said he would not rule out such an expansion by way of establishing an alliance or mergers.
The HKEx has been the world's largest IPO market worldwide over the past three years in terms of funds raised, but its only commodities trading is in gold futures.
The sources did not disclose the HKEx bid price, but brokers believe it may be up to GBP1 billion (HK$12.2 billion) to compete with other bidders who include the New York Stock Exchange, Euronext, CME and Intercontinental Exchange.
Another person familiar with the situation said the HKEx had put in a high bid, but it was difficult to predict the outcome.
'The LME may have other considerations and the HKEx will also need to consider if it can keep the members and the key employees of the LME after an acquisition. It is just too early to say if a deal will be sealed,' the person said.