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After Financial Technologies, Blackstone buys into India’s largest commodity exchange MCX

08 March, 2013

Private equity giant Blackstone has picked up a 2 per cent stake in Multi-Commodity Exchange of India (MCX) for Rs 104 crore through market deals. The stake buy comes after the Blackstone picked up stake in Financial Technologies (India), the parent company of India’s largest commodity bourse MCX, last year.

This is the third instance of Blackstone picking up stake through the market after it bought stakes in transactions-related technology provider Financial Technologies (India) and Monnet Ispat & Energy Ltd, one of India’s largest manufacturers of integrated coal-based sponge iron.

Blackstone joins other investors including Intel Capital, NYSE Euronext, Fidelity and Passport Capital.

Through Blackstone GPV Capital Partners Mauritius VI FII, the world’s largest alternative asset manager bought stake from Merrill Lynch (Mauritius), one of the pre-IPO investors in MCX. Shares were bought for Rs 1,020, a 5 per cent premium to the closing price on Friday.

Shares of MCX closed at Rs 970.1 on BSE, down by 4.5 per cent, giving the company a market capitalisation of Rs 4,947.51 crore.

Blackstone’s purchase price is close to the listing price of Rs 1,032 of MCX, which completed its listing nearly a year ago in February 2012. Shares of MCX have reached a 52-week high of Rs 1,617.

In 2012, Blackstone picked up 6.1 per cent stake in Financial Technologies, which started MCX and currently owns 26 per cent stake in the exchange.

MCX is the market leader in commodities future industry with over 85 per cent market share, offering trading in 49 commodity futures.

“We like MCX for its market leadership, early mover advantage, edge in innovation, technology support from FTIL and sticky liquidity. The exchange, with eight years of operating history, is in a growth phase with structural levers in place for an upward trajectory in volume over the long term,” said an Edelweiss report last month.

For Q3FY13, MCX reported a 2.7 per cent increase in revenues to Rs 161.8 crore with profit after tax up 10.3 per cent to Rs 75.9 crore as compared to the same quarter last year.

The company also started trading equity last month under MCX-SX last month, after getting market regulator SEBI’s nod for the equity, equity F&O, interest rate futures and wholesale debt segments on July 2012.

“MCX’s direct equity holding of 5 per cent and warrants equivalent to 33 per cent in MCX‐SX can fetch valuation equivalent to Rs 120‐140 per share in two‐three years (based on assumption of MCX’s stock exchange being able to command 25 per cent of valuation of leading exchange in India and ascribing 50 per cent valuation discount to warrants),” added the Edelweiss report.

Related

Blackstone discloses investment in Financial Tech, ups holding to 6.1%

PE-backed MCX Completes IPO, Biggest Public Issue In Seven Months

(Edited by Prem Udayabhanu)


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After Financial Technologies, Blackstone buys into India’s largest commodity exchange MCX

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