UCX-BBA consortium offers to buy FTIL's stake in MCX
02 Jan 2014
A consortium comprising Universal Commodity Exchange (UCX) and the Bombay Bullion Association (BBA) has expressed interest in buying out the promoter stake of Financial Technologies India Ltd (FTIL) in the Multi Commodity Exchange of India (MCX) under a merger deal.
The consortium has written to the commodity markets regulator Forward Markets Commission (FMC) expressing interest in picking up the 24 per cent stake to be sold in the exchange promoted by Jignesh Shah's Financial Technologies (FTIL) group.
The UCX-BBA offer comes after commodity market regulator Forward Markets Commission (FMC) asked Jignesh Shah-led FTIL to reduce its stake in MCX from 26 per cent to 2 per cent or below.
FMC had declared that Shah and FTIL are not ''fit & proper'' to run MCX or any exchange in the country or even be a promoter, bringing more uncertainty in the functioning of the bourse. The board of MCX had, on 27 December 2013, advised FTIL to bring down its stake from 26 per cent to a maximum of 2 per cent within one month.
Shah and FTIL has challenged the FMC order in the Bombay high court.
According to BBA president Mohit Kamboj, there is a strong linkage between the bullion business and the commodity exchanges and the bullion business needed a reliable exchange to base their transactions.
He said the association plans to expand with members from across the country and expand its board from 15 to 93 members in order to mobilise funds needed for the acquisition of the 24 per cent stake in MCX, adding that a 5 per cent stake would involve an investment of around Rs100-120 crore.
At this price, which values MCX at Rs2,400 crore, the 24 per cent stake could cost anywhere between Rs480 crore and Rs576 crore.
The MCX stock closed at Rs493 on Wednesday, giving the commodity bourse a market valuation of Rs2,511 crore.
Ketan Sheth, the main promoter of UCX, meanwhile, said several private equity funds and institutional investors are also looking for a strategic stake in MCX and have approached him as they wanted someone familiar with the commodities business.
UCX, although a relatively smaller exchange with turnover of less than Rs250 crore, has been into the commodities exchange business for long, Shah said.
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