The market regulator’s permission to start interest rate futures has eluded the MCX Stock Exchange (MCX SX) so far, as the promoters have not yet diluted their controlling stake.
MCX executives did not want to comment on the issue. The exchange is however confident of meeting the September 15 deadline for disinvestment of stake, for which the roadshows are ending on August 31. In the past, exchanges such as the Bombay Stock Exchange and the National Stock Exchange were given extensions in deadline to help them comply with Sebi demutualisation guidelines.
The exchange’s plan to launch trading in equity also hinges on the dilution of stake. The Multi Commodity Exchange of India and Financial Technologies are the co-promoters of MCX SX.
At present, the exchange is providing a platform for currency futures and in less than a year of the launch of the segment, MCX SX has managed to acquire nearly 50 per cent market share.
While MCX is in talks with several players – domestic as well as international — to sell stake in MCX SX, the valuation is proving to be a tricky issue. Based on the last transaction involving the sale of MCX SX shares at a premium of Rs 34 each to IFCI, the enterprise value works out to around Rs 5,000 crore. The Delhi-based non-banking finance company acquired a 5 per cent stake.
Apart from this, the promoters had sold 18 per cent to banks, including Union Bank of India and Bank of India. It is expected to sell another seven per cent to banks and in all, around 50 per cent stake is proposed to be offloaded.
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MCX SX had sold a 6.48 per cent stake to Union Bank of India and Bank of India at for Rs 87.5 crore in June this year. The banks had picked up shares through a primary offering at Rs 10 a share, valuing the exchange that time at Rs 1,390 crore.
When contacted, a senior IFCI executive defended the deal, saying the decision was taken based on MCX’s track record and future prospects of the exchanges’ business.
The valuation has already resulted in the government nominee on the IFCI board, K V Eapan, who is a joint secretary in the finance ministry, expressing concern.
IFCI executives, however, said the downside risk was protected, as MCX would sell more shares in MCX SX if it disinvested stake at a premium of less than Rs 25 a share.
In such a scenario, IFCI, which is also seeking representation on the MCX SX board, could hold up to 15 per cent stake, the maximum permissible level under Sebi guidelines, a senior company executive said.
Under Sebi norms, a specified set of domestic investors – including depositories, stock exchanges, banks and financial institutions — can hold up to 15 per cent stake in a stock exchange.