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Merrill Lynch, Citigroup buy 10 p.c. in MCX

MUMBAI: Merrill Lynch and Citigroup have picked up five per cent stake each in Multi Commodity Exchange of India (MCX) for a total consideration of Rs. 480 crore.

Financial Technologies (India) Ltd. (FTIL), the parent company of MCX, sold the stake. FTIL has also entered into agreements to offload three per cent and two per cent stake to two foreign funds — Passport India Investment (Mauritius) and GLG Financials Fund, respectively. The transactions put the enterprise value of MCX at over $1.1 billion (Rs. 4,400 crore).

FTIL would get about Rs. 720 crore from selling 15 per cent stake in MCX, an exchange official said. With the sale, FTIL’s shareholding in MCX would come down to 49 per cent, he added.

The divestment by FTIL has come even though the Central Government is yet to formulate guidelines on regulating foreign equity in Indian commodity exchanges.

In the absence of any guideline, the commodity market regulator, Forward Markets Commission, had asked the exchanges to maintain status quo till proper guidelines were issued. However, MCX officials said necessary approval had been taken from FMC and other authorities.

When contacted, FMC Chairman B. C. Khatua said the approval was conditional. “We have approved the stake sale on the condition that they have to conform to the guidelines when they come,” Mr. Khatua said. He said the guidelines on FII stakes in commodity exchanges were expected to be similar to the ones brought out by the Securities and Exchange Board of India for the stock market. FIIs can invest up to five per cent each in stock exchanges.

HDFC Bank, State Bank of India and its associate banks, Canara Bank, Bank of India, Union Bank of India and Bank of Baroda together hold about 27 per cent stake in MCX.

Fidelity International has nine per cent stake through its associate FID Fund (Mauritius) Ltd. in the commodity exchange. Another foreign investor Goldman Sachs has a seven per cent stake in rival commodity bourse NCDEX.

FTIL plans to invest the sale proceeds in its greenfield ecosystem ventures — National Spot Exchange Ltd (NSEL), National Bulk Handling Corporation Ltd (NBHC) and others — a company statement said.

These investments from strategic international partners would provide Indian commodity markets and MCX access to global knowhow and technology, making them more efficient, competitive and transparent institutions globally, it said.

FTIL shares on Friday closed at Rs. 2,689.95, up 3.36 per cent on the Bombay Stock Exchange. — PTI

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