State-run trading company MMTC does a rethink, to retain equity in ICEX

State run trading company MMTC Ltd has done a rethink on its equity status in the Indian Commodity Exchange Ltd (ICEX).

MMTC had decided to offload its residual 9.5 per cent stake last year, marking its complete exit from the bourse. The exchange is a public private partnership with Reliance Exchange Next Ltd, MMTC, Indiabulls Housing Finance Ltd, Indian Potash Ltd, Kribhco and IDFC Bank as the major shareholders. 

MMTC's previous decision to pull out of ICEX stemmed from its lacklustre performance. The commodity exchange did not take off in a big way and trading was suspended for three years. Also, the company thought that being a minor equity participant did not make much sense as it would be deprived of a say in decision making. 

Later, the exchange has regained momentum, goading MMTC to reverse its decision. ICEX targets a daily turnover of Rs 10 billion from next fiscal, aided by existing contracts of diamond, steel and rubber as well as new contracts in agri and non-agri commodities expected to be introduced shortly. The National Company Law Tribunal (NCLT) recently approved the merger of National Multi Commodity Exchange (NMCE) with ICEX. Pursuant to the merger, all commodity contracts on NMCE would shift to the ICEX platform.

"We have been observing the performance of ICEX. The exchange has bounced back, restarting with diamond futures. It has also gone for business diversification. The exchange's turnaround performance has ignited hope and we don't see any immediate need to sell our stake," said a senior MMTC executive.
 

With the approval of its board in September 2007, MMTC had participated in setting up a joint venture in association with India Bulls Financial Services Ltd (IBFSL) to establish a national stock exchange. On July 17 2008, commodities market regulator Forward Markets Commission (FMC) granted in-principle approval and subsequently, ICEX was incorporated on August 12, 2008. FMC granted recognition to ICEX on October 9, 2009 and commercial operations started on November 27, 2009.

On February 12, 2009, a shareholder agreement was signed between MMTC, IBFSL and ICEX. IBFSL and MMTC held 40 per cent and 26 per cent equity respectively. The balance 34 per cent was held by other investors. But in December 2010, IBFSL transferred 26 per cent shareholding in ICEX to Reliance Exchange Next Ltd. Later, in January 2016, MMTC also sold its 10 per cent stake in ICEX to Akhil Gupta and another Delhi-based investor Vijay Sharma of B N Enterprises.

Earlier, MMTC had divested its 10 per cent equity in the exchange in January 2016. Later, it stayed away from two Rights Issues that pulled down its equity in ICEX to 9.5 per cent.

MMTC is presently the third biggest shareholder in ICEX after Reliance Exchange Next which has 26 per cent stake and Indiabulls Housing Finance Ltd with a shareholding of 10.45 per cent. Other key corporate shareholders are Abhinay Trading Pvt Ltd (8.36 per cent), Indian Potash Ltd (8 per cent), Adventz Finance Pvt Ltd (4.48 per cent), Krishak Bharti Cooperative Ltd (4 per cent) and IDFC Bank Ltd (2.99 per cent). Bharti Infratel chairman Akhil Gupta owns five per cent five per cent stake in ICEX which also has Bollywood celebrities Aamir Khan (0.6 per cent) and Ranbir Rishi Kapoor (0.3 per cent) as shareholders.