Financial Tech identifies 3 for MCX stake sale

Financial Technologies India (FTIL), the key promoter of the Multi Commodity Exchange (MCX), has identified three key strategic partners for offloading 16 per cent equity stake in the country's largest commodity exchange.

B C Khatua, chairman of the Forward Markets Commission (FMC), said on the sidelines of the 4th International Diamond & Gold Convention in Mumbai that the FT Group has identified three parties for the stake sale, but refused to divulge any names.

Joseph Massey, deputy managing director, MCX, neither confirmed nor denied the development, while adding that divulging names and their proposed equity interest would be mere speculation until the deals were finalised.

FTIL had proposed to divest equity stake in the commodities exchange to five partners, three of which have been identified thus far. This was aimed at bringing bring down its equity holding to 38 per cent, as permitted by the commodity markets regulator.

Commenting on further equity dilution, Khatua said that one large equity holder is required to take at least 26 per cent stake.

Otherwise, all stakeholders may lose business interest in the exchange.

Global financial institutions Merrill Lynch and Citigroup recently picked up 5 per cent each in MCX, valuing the country's largest commodity exchange at over $1 billion.

In another proposal, FTIL has entered into agreements to offload 3 per cent and 2 per cent to two foreign funds Passport India Investment (Mauritius) and GLG Financials Fund. With the sale, FTILs shareholding in MCX will come down to 49 per cent.

In a communique to BSE, FTIL has said that the investments by strategic international partners would provide the Indian commodity markets access to global know-how, best practices, domain knowledge and technology.

Foreign investment amounting to 49 per cent is permitted in the commodity exchanges, which includes 26 per cent foreign direct investment (FDI) and 23 per cent foreign institutional investors (FII).

On completion of the transactions, the foreign holdings in MCX will shoot up to 24 per cent, as Fidelity International already owns 9 per cent.

Banks including HDFC Bank, State Bank of India and its associate banks, Canara Bank, Bank of India, Union Bank and Bank of Baroda accounts for about 27 per cent equity stake in MCX.