)
An earlier version of this article had wrongly referred to the exchange as MCX instead of MCX-SX in the headline. This has been corrected and we apologise for the error.
The Multi Commodities Exchange Stock Exchange (MCX-SX) announced on Friday that it had managed to garner Rs 60 crore or 11 per cent out of the original rights issue target of Rs 544.69 crore.
The deadline for the same had been extended twice — from April 1 to April 17 and then to April 30; and the size of the rights issue had also been reduced to around Rs 250 crore. The exchange plans a preferential issue to raise more capital after six months, according to a statement from the bourse; with a spokesperson adding its net worth after the rights issue is Rs 180-200 crore, more than the regulatory requirement of Rs 100 crore.
“The names of the institutions that subscribed to the issue will be announced once the allotment process is completed. The proceeds of rights issue will be utilised towards development of business and to attract new participants on the exchange platform," said the statement.
| RAISING CAPITAL |
|
Sixteen public sector banks and financial institutions hold over 80 per cent stake in the exchange.
Sources suggested it was majorly the public banks and financial institutions that came to the aid of the exchange on finance ministry's insistence. At least two large private banks also a public sector major backed out of subscribing to the rights issue post the reports of Central Bureau of Investigation launching a preliminary inquiry in the licence grant of MCX-SX. A spokesperson declined to comment on the same. “The exchange would plan for a preferential allotment after six months, as it has received expression of interest from new domestic and international investors. An investment banker would be appointed for this process,” said the exchange statement.
A preferential issue is a process by which companies raise money through selling shares or convertibles to a select group of investors, rather than to the public at large. A rights issue is an offer to those holding securities, such as shares issued by a company; to buy more of the same. In the example of a rights issue of shares, the additional ones offered to them would be proportion to how much they currently hold.
The stock market regulator had passed an order on March 19 against the promoter Financial Technologies India Limited (FTIL) to completely divest its stake in the MCX-SX, as they had deemed them “not fit and proper” to have a stake in a stock exchange. The move came after a subsidiary, the National Spot Exchange Limited (NSEL) was involved in a Rs 5,600-crore payment crisis.
“The exchange's net worth would also increase due to the recent directive by Sebi to FTIL for divestment of convertible warrants. Conversion of these warrants into equity will result in increase in share capital by Rs 56 crores,” added the exchange statement.
Sebi had given a deadline of 90 days from the day the order was passed for stake divestment. FTIL and MCX held 4.99 per cent stake each in MCX-SX along with some warrants, which add up to around 68.72 per cent stake in the exchange. They were re-classified from promoter to public shareholder in March.
