National Commodities and Derivatives Exchange (NCDEX), the country’s number two exchange in terms of market share and volumes, is set to get new anchor investors who can steer it when competition increases with rising business potential.
The Exchange has decided to allot 26 per cent fresh equity to New Delhi-based share holder Jaypee Capital. The share prices for the deal could not be ascertained. However, sources said it could be much less than the price of the last deal in the exchange.
It is learnt that out of the 26 per cent new shares, around three per cent shares will go to Shree Renuka Sugars increasing its share to nearly 15 per cent. Jaypee and Renuka will together assume the anchor role, said sources. When contacted, an NCDEX spokesperson declined to comment.
Recently, Shree Renuka Sugars had acquired 7 per cent equity from CRISIL at Rs 145 per share. NCDEX paid a capital base of Rs 37.5 crore and decided to issue fresh capital of Rs 13 crore (1.30 crore per share of Rs 10 face value and premium) to fulfill the Forward Markets Commission’s regulations on having a capital base of Rs 50 crore. The new shares will be issued to Jaypee Capital — the company that has initiated a move to set up a currency exchange, United Stock Exchange of India, that will start operations from Monday.
New shares would be issued at a price lower than the price at which the rights issue of the exchange was done earlier this year. The rights issue was made at Rs 110 per share.
While the new investor will get the shares at a lower price, in return he will have to make a commitment to develop the exchange that would result in higher market share. This is crucial, as many new players are entering the business of running exchanges and with the Cabinet clearing the bill to amend the FCR Act, many new opportunities will also emerge.
Jaypee Capital has large quantities of share in the derivatives business share across markets. However, FMC rules do not permit shareholders to trade or hedge on the exchange in which they own shares. Jaypee is understood to have surrendered its membership on the exchange to meet this criterion.
Sources said Jaypee may not be the only one to play the role of an anchor investor and may rope in Shree Renuka Sugars that holds 12 per cent. It will part with some shares which will bring Renuka’s holding to nearly 15 per cent leaving 22-23 per cent for the company.
NCDEX was set up by a consortium of institutional investors led by ICICI Bank in 2003, but later following ICICI’s exit from the exchange, NSE assumed the lead role in the exchange. NSE holds 15 per cent. However FMC’s new regulations have capped equity holding by a stock exchange in a commodity exchange to just 5 per cent and NSE is supposed to reduce its holding in the exchange.
