The Hindu : Business : NYSE Euronext to buy 5 per cent stake in Multi-Commodity Exchange

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NYSE Euronext to buy 5 per cent stake in Multi-Commodity Exchange

The purchase consideration will be Rs. 240 crore

Enterprise value works out to $1.1 b
Transaction to close in the first half of 2008

MUMBAI: The Multi-Commodity Exchange (MCX) on Friday said U.S.-based NYSE Euronext would acquire a five per cent stake in the exchange for Rs. 240 crore ($55 million).

MCX said that it had signed a binding term sheet to offer a five per cent equity position to NYSE Euronext.

The five per cent equity investment is the maximum equity interest permitted to foreign investors in derivative exchanges under current laws. Last month, the Government had allowed foreign companies, funds and exchanges to acquire up to 49 per cent of a commodity bourse, but with single holdings capped at five per cent.

The closing of the transaction is expected to take place in the first half of 2008, subject to all relevant regulatory approvals.

For NYSE Euronext, this will be its second investment in India after buying a five per cent stake in the National Stock Exchange and its first investment in a commodity exchange in the Asia-Pacific.

“The enterprise value of the exchange works out to $1.1 billion, and the funding will be deployed in development of the eco-system and growth of the Indian commodity market,” MCX’s Managing Director and CEO Jignesh Shah said.

“The total foreign direct investment (FDI) now stands at 22 per cent and the promoter group company, Financial Technologies India’s (FTIL) holding stands at 32 per cent,” Mr. Shah said.

“MCX will produce new business opportunities for NYSE Euronext,” NYSE Euronext’s Chief Executive Officer Duncan L Niederauer said. Last year, Citigroup and Merrill Lynch had each bought 5 per cent in MCX through the FDI route.— PTI

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