‘We paid a fair market price’ for LME: Lamba

Dec 06, 2012 | 12:28 PM | Andrea Hotter

Tags  Hong Kong Exchanges, LME, Romnesh Lamba, Andrea Hotter

NEW YORK — Hong Kong Exchanges & Clearing Ltd. (HKEx) paid the market rate for the London Metal Exchange and expects to more than recoup it in the next few years, Romnesh Lamba, head of market development, told AMM.

HKEx upped its bid for the U.K.-based metals trading exchange to £1.388 billion ($2.09 billion) and clinched the backing of the LME board before going on to secure overwhelming shareholder support in a July vote.

It instantly drew criticism for paying way more than the average price-to-earnings ratio for the exchange, with the LME—which has never operated on a fully commercial model, keeping its fees low relative to other exchanges—generating a 2011 net profit of just £7.7 million.

But Lamba said that criticism is unfair, adding that the sale process was a "full and fair auction" of the 135-year-old exchange.

"We paid a fair market price between a willing buyer and a willing seller. There were actually three willing buyers—the other two were the world’s biggest commodity exchanges and pretty much whatever we were willing to pay, they were willing to pay," he said, referring to Intercontinental Exchange Inc. and CME Group. ....