By Jonathan Burgos and Eduard Gismatullin

(Bloomberg) — Singapore Exchange Ltd. mentioned it’s searching for to purchase Baltic Exchange Ltd., the 272-year-old London-based supplier of knowledge on international delivery prices.

SGX has made a non-binding bid for the Baltic, Southeast Asia’s largest bourse operator mentioned in a press release Friday after Reuters reported that talks have been going down. Discussions are preliminary, SGX mentioned.

The Baltic Exchange confirmed in an e-mail that it has acquired a number of approaches and is now in talks with a number of corporations. Reuters earlier mentioned the Baltic Exchange had held talks with London Metal Exchange, CME Group Inc., Intercontinental Exchange Inc. and Platts. The company’s report cited unidentified individuals aware of the matter.

The information of the supply comes days after London Stock Exchange Group Plc and Deutsche Boerse AG mentioned they have been in merger talks, doubtlessly igniting a brand new spherical of merger-and-acquisition exercise between exchanges. For SGX, contracts utilizing the Baltic’s freight-rate knowledge are an interesting goal.

“This acquisition will help SGX strengthen their derivatives business,” Bernard Aw, a strategist at IG Asia Pte in Singapore, mentioned by cellphone. “Their derivatives business has been doing quite well. If equity trading continues to stagnate, derivatives will become increasingly dominant.”

Derivatives accounted for about 40 % of SGX’s most up-to-date quarterly income as demand grows for contracts tied to equities and commodities, together with iron ore. The alternate additionally gives freight contracts tied to delivery prices compiled by the Baltic Exchange.

London Coffeehouses

The Baltic, which publishes benchmark freight charges, is among the City of London’s most well-known buying and selling names. Like insurance coverage market Lloyd’s of London, it grew out of 18th-century coffeehouses, the place shipowners and retailers matched vessels with cargoes akin to grain. Its title is derived from the commerce in tallow, used to make candles and cleaning soap, and different items that originated from the Baltic states.

The firm is owned by its bulk delivery business members, based on its web site, one of many final member-owned exchanges in an age of for-profit companies. London Metal Exchange surrendered its member-owned standing after it was purchased by Hong Kong Exchanges & Clearing Ltd. in 2012. The Baltic rejected a proposal from the LME in 2010 to cooperate on beginning a freight derivatives alternate.

The firm has 30 employees in London, Athens, Singapore and Shanghai. It reported internet earnings of 1.34 million kilos ($1.88 million) within the yr ended March 31, 2015 and income of 6 million kilos, based on its web site.

SGX has been growing its derivatives enterprise to offset lackluster fairness buying and selling quantity within the metropolis state. While the common every day worth of shares traded within the Singapore market elevated 5.1 % to S$1.1 billion ($785 million) in 2015, it stays properly under the S$1.7 billion that modified fingers day by day earlier than the worldwide monetary disaster, knowledge compiled by Bloomberg present.

Singapore Expansion

“Singapore Exchange has quite poor home liquidity,” mentioned Tony Tanaka, a Tokyo-based analyst at Haitong International. “They have to expand liquidity, they have to expand outside Singapore. It has always been a focus for them.”

SGX in 2011 didn’t buy ASX Ltd., Australia’s primary alternate operator, after the nation’s authorities blocked the bid citing nationwide pursuits. Loh Boon Chye, who grew to become SGX CEO final yr, mentioned in July that the bourse is open to creating acquisitions.

“SGX wishes to emphasize that as discussions are still preliminary, there is no certainty or assurance that the possible transaction will materialize or that any definitive or binding agreement will result from such discussions,” the alternate mentioned in an e-mailed assertion.

The Baltic Exchange has appointed Nomura Holdings Inc. and Norton Rose Fulbright LLP as advisers.

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