Exclusive - Baltic Exchange holds talks with suitors over possible sale - sources

By Jonathan Saul and Anshuman Daga

LONDON/SINGAPORE (Reuters) - The Baltic Exchange, the hub of the global shipping market, has held talks with potential buyers including Singapore Exchange Ltd, months after the London Metal Exchange made an approach to buy it, sources familiar with the matter told Reuters.

In October, sources said the London Metal Exchange (LME) had informally approached the London-based and privately-owned Baltic Exchange about a potential deal.

Since then, there have been discussions with a number of other parties, including Singapore Exchange Ltd (SGX) (SGXL.SI), CME Group (CME.O), ICE (ICE.N) and Platts, the sources said, speaking on condition of anonymity as the matter isn't public.

CME, ICE and Platts declined to comment, as did Baltic Exchange chief executive Jeremy Penn when contacted on Thursday.

Two of the sources said SGX had been in talks with the Baltic. One said talks were not advanced, but a deal would be a good fit as Singapore looks to bolster its role as a maritime hub and for SGX to strengthen its freight derivatives business.

"A deal would be seen as earnings accretive in the near-term," that source said.

It was unclear whether the talks had been initiated by the Baltic or its suitors.

A third source added SGX was working with investment bank Jefferies on the potential deal.

SGX and Jefferies declined to comment.

The Baltic produces daily benchmark rates and indices that are used across the world to trade and settle freight contracts. Despite its name, it is no longer a forum for trade in the chartering of vessels.

Amid growing regulatory scrutiny and weak commodities markets, clearing houses and exchanges are all looking for an edge to give them a profitability boost.

While the shipping market is currently suffering from overcapacity and sluggish global trade, the Baltic has carved out an industry-leading position in freight derivatives including through its Baltex platform.

NOMURA ADVISING

Three sources said Japan's biggest investment bank Nomura Holdings Inc had been appointed as the Baltic's adviser for a possible sale.

Nomura declined to comment.

Sources said there had also been contact between the Baltic, which is owned by around 380 shareholders, many from the shipping industry, and the London Stock Exchange (LSE.L), which has a majority stake in clearing house LCH.Clearnet.

This, though, is unlikely to progress given the possible merger between Deutsche Boerse (DB1Gn.DE) and the LSE announced this week.

The LSE declined to comment.

The LME - previously owned by its members - was itself bought by Hong Kong Exchanges and Clearing (HKEx) in 2012 for $2.2 billion (£1.5 billion). A deal with the Baltic would help the LME to expand its reach beyond metals. The LME declined to comment.

The Baltic, founded in 1744, had previously rebuffed approaches from the LME.

The first was an LME-proposed joint venture in 2010 to launch an exchange for freight derivatives trading.

In 2013, sources familiar with the matter said the Baltic had received expressions of interest from the LME and other suitors for its Baltex platform, launched in 2011.

(Additional reporting by Maytaal Angel, Eric Onstad, Clara Denina and Pratima Desai in London; Editing by Veronica Brown and Mark Potter)