ICICI Ventures is close to picking up a 5% equity stake in Multi Commodity Exchange of India (MCX). Earlier this year multinationals like Merrill Lynch and Citigroup had bought 5% each in the exchange.
According to sources, talks with ICICI Ventures and a couple of other investors have been going on for the past couple of months. An announcement on the same is expected soon. Earlier this year when Financial Technologies (FT), the promoter of MCX, sold its stake to Citi and Merrill Lynch the exchange was valued at slightly over $1 bn. The stake sale to ICICI Ventures is also likely to be around the same valuation.
ICICI Ventures may buy the stake from Financial Technologies. FT currently holds 49% in the exchange. The other major stakeholders of the exchange are HDFC Bank, SBI and other public sector banks holding a total 27%, FID Fund (Mauritus) — an affiliate of Fidelity International has a 9% stake, both Citi and Merrill Lynch have a 5% stake each, Passport India Investment (Mauritius) has 3% stake while GLG Financials Fund has another 2% stake. When contacted senior MCX officials said “We would not like to confirm or deny the development at this stage.”
ICICI group officials refused to comment on the same. Last year Goldman Sachs had acquired a 7% stake in National Commodities and Derivatives Exchange Ltd (NCDEX) from ICICI Bank for Rs 106 cr, thus valuing the exchange at Rs 1,520 cr.
The new norms to allow foreign investment in commodity exchanges are just waiting in the wings. The proposal, which has been finalised by the consumer affairs ministry in conjunction with the finance ministry is awaiting the Union cabinet’s approval.
Sections think these norms may be on the similar lines of the foreign investment rules in stock exchanges, stipulated at 49%. Of this, there is a 26% cap on FDI and 23% cap on FII as per RBI guidelines.
Further, Sebi has stipulated the investment limit for a single foreign investor at 5%, beyond which an FII or any other investor, like foreign stock exchanges, cannot raise its stake in domestic exchanges. MCX is keen to go public, but may be awaiting a greater clarity yet on the foreign equity holding norms in commodity exchanges.
Source: Economic Times