MCX to file revised IPO papers in mid-Feb

Financial Technologies India (FTIL), the country's leading technology solutions provider to exchanges and brokerage firms, is in the process of filing a revised draft red herring prospectus (DRHP) in the second fortnight of February to dilute another 5.5 per cent stake in the Multi Commodity Exchange (MCX) through an initial public offering (IPO).

The proposed IPO would be the country's first public issue by any exchange.

MCX had earlier filed papers with Sebi in March 2006. However, the proposal remained under Sebi's consideration because of unclear government policies on foreign direct investment (FDI) and foreign institutional investment (FII).

With the Centre finalising the policy on foreign investment in commodity exchanges, experts believe there will be no problem for MCX's public issue this time.

Sources close to the development said the IPO size could be between Rs 500 crore and Rs 600 crore. The company is planning to enter the capital market by the first week of May.

FTIL, the promoter of the exchange, holds 37.45 per cent of equity in MCX. The promoter plans to dilute its stake to 32 per cent after the IPO.

The capital raised would be spent mainly on developing facilities at its subsidiaries such as National Bulk Handling Corporation (NBHC) and National Spot Exchange (NSEL).

The exchange has also chalked out a major rural connectivity programme to create direct backward and forward linkages with farmers by installing ticker boards in rural post offices and mandis.

In December 2007, FTIL had sold a 9.55 per cent stake to ICICI Venture, Infrastructure Leasing & Financial Services and the Kotak Group for around Rs 420 crore at a total valuation of the exchange at Rs 4,400 crore ($1.2 billion).

While ICICI Venture, ICICI Bank's private equity arm, bought 3.55 per cent, IL&FS picked up 5 per cent and Kotak's India Growth Fund took 1 per cent in the commodity exchange. Fidelity has 9 per cent stake in the exchange, while Citigroup and Merrill Lynch own 5 per cent each.

MCX is the world's third biggest gold bourse and accounts for more than four-fifths of gold futures traded in India.

The exchange currently offers futures trading in 56 commodities and is a leader in commodity derivatives with a total daily average turnover of $3.5 billion.