Metropolitan Stock Exchange to raise Rs 238 cr in fresh attempt at revival

Firms owned by Groww, Zerodha among investors

Metropolitan Stock Exchange of India (MSE) plans to raise Rs 238 crore from investors in an attempt to stay afloat. The beleaguered exchange’s board has approved issuance of 1.19 billion equity shares of face value Rs 1 at a premium of Rs 1 through private placements, according to a disclosure on its website.

 

The proposed allottees are Billionbrains Garage Ventures (parent company of largest broker by active clients Groww), Rainmatter Investments (the investment arm of the founders of India’s most profitable brokerage Zerodha), the BSE-listed Share India Securities, and Securocorp Securities India. The allotment is subject to approvals of existing shareholders at the ensuing extraordinary general meeting.

 

In a stock exchange filing, Share India Securities said it had taken a “strategic decision” to invest Rs 59.5 crore in MSE for a 4.958 per cent stake. This pegs MSE’s valuation at Rs 1,200 crore.

 

MSE — recognised as a stock exchange under Section 4 of the Securities Contracts (Regulation) Act — is a full-service national-level stock exchange with licence to operate in equity, equity derivatives, currency derivatives, debt, and small and medium-sized enterprise (SME) platforms. 

 

The company – formerly known as MCX-SX — was set up in 2008 by Jignesh Shah-led entities. However, following the NSEL scam, the ownership of the bourse changed. As a revival plan, it attracted investments from banks such as State Bank of India, Bank of Baroda, Punjab National Bank, Axis Bank, and HDFC Bank. Financial institutions such as Edelweiss Commodities, IL&FS Financial Services, and individual investors like the late Rakesh Jhunjhunwala and Radhakishan Damani too invested in MSE.

 

However, as the exchange failed to generate volumes, its net worth started to erode.

 

According to a July 2023 Sebi order, MSE’s Chairman in a letter dated January 25, 2022, wrote to the market regulator that  the net  worth  of  the exchange had “been continuously eroding and if the exchange’s net worth falls below Rs 100 crore, it needs to be closed down.”

 

Industry players said BSE’s recent success buoyed MSE’s revival plan.

 

“The exchange business was thought to be winner-takes-all, however, the BSE has managed to challenge NSE's derivatives dominance. Also, the regulator is pushing for more competition in the exchange space to mitigate risks like cyber-attacks. MSE is among the select few to have a stock exchange licence. As a result, despite past revival attempts failing, it continues to attract new investments,” said a former exchange official.