Indiabulls Financial Services has indicated it will completely exit the commodities exchange business, by selling its entire 40 per cent stake in Indian Commodity Exchange (ICEX).
It had earlier decided to sell 26 per cent to the Reliance Anil Dhirubhai Ambani Group (ADAG). Government-owned Minerals and Metals Trading Corporation (MMTC), which already has a 26 per cent stake in ICEX, has the right of first refusal on any such deal. However, MMTC can increase its own stake up to only 40 per cent. If it decides to buy, it can then do so for only an additional 14 per cent.
“MMTC has the right of first refusal on the 26 per cent Indiabulls stake but the board is yet to take a call on it. We also have the option to tag along and sell our stake in the company,” an MMTC executive said in response to a query.
At least three people privy to the discussions told Business Standard that while seeking regulatory approval, Indiabulls had given two-three options to the Forward Markets Commission. FMC has sent on the share sale plan to the Department of Consumer Affairs for further approval.
ICEX was co-promoted by Indiabulls and MMTC but the two were forced to bring in other shareholders, as the rules did not permit them anyone more than 40 per cent in a commodity futures exchange.
Another executive involved with the deal said Indiabulls wanted to retain some stake in ICEX but it depended on how the regulators and other shareholders reacted to the move to sell stake to Reliance ADAG. MMTC was supposed to exercise its first refusal right within 30 days of receiving the proposal. It had, however, asked for more time and Indiabulls had agreed.
ICEX started operations less than a year earlier but Indiabulls has decided to exit the space and will at best retain a small holding. “We are not looking at strategic exit from the commodity futures business,” said Indiabulls’ group director, Ajit Mittal.
