With the March 31 deadline approaching, the top three commodity exchanges are in a hurry to complete their capital restructuring in line with Forward Markets Commission (FMC) guidelines.
FMC had asked the three exchanges that went live in the first phase in end 2003 to increase their capital base to Rs 50 crore and each anchor investor to reduce individual stake in the exchange to a maximum 26 per cent. The deadline was given a year before. The three are the Multi Commodities Exchange (MCX), the National Commodities and Derivatives Exchange (NCDEX) and National Multi-Commodities Exchange (NMCE).
MCX is issuing bonus shares in a 1:4 ratio, approved in the company’s annual general meeting on Monday, to raise the capital to Rs 50 crore. However, the promoter company, Financial Technologies, holds nearly 31 per cent stake in the exchange; this has to be brought down to 26 per cent by March 31. Sources said this could be done through strategic sale or an Initial Public Offer (IPO), for which FMC gave clearance in 2010.
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NCDEX has expanded the capital base to the needed level but one of the original promoters, National Stock Exchange (NSE), has to bring down its stake from 11.1 per cent at present to five per cent by March 31; this is the cap if the promoter is a stock exchange. The exchange has appointed JM Financial to find a buyer. A foreign bank is said to be a frontrunner but this could not be confirmed.
NMCE’s capital base is Rs 19.20 crore, which they would have to raise to Rs 50 crore. A spokesperson of the exchange said they were in talks with some investors, mostly domestic, to issue them fresh shares to increase the base. He said Equirush, the investment banker has been appointed to find a buyer.
The exchange may ask for more time if the deal is not done by the stipulated time. Sometime earlier, an individual share holder, Anil Singhania, had sold 24 per cent out of his 25 per cent stake equally to Kailash Gupta (chief promoter) and Central Warehousing Corporation (CWC). Both Gupta and CWC will have to bring down their stake to 26 per cent each; the former has nearly 30 per cent and CWC holds 38 per cent. If the exchange is successful in strategic sale, then this stake will automatically come down, as new shares would be issued to raise capital base.
NMCE is also trying to put its house in order. First it asked its members who were short on compliance to fulfill all requirements. The members have started complying, said the official. Based on observations by the FMC, the exchange had also started evaluating the role and record of various consultants.