Indian billionaire Anil Ambani’s group plans to buy 26 percent of a local commodities exchange, signalling growing corporate interest in bourses where Goldman Sachs and IntercontinentalExchange have bought small stakes.
The Reliance Anil Dhirubhai Ambani Group (R-ADAG) plans to buy a stake in the Indian Commodity Exchange (ICEX), a leading bourse for trade in metals including gold, while Jaypee Capital wants to acquire 26 percent in the National Commodity and Derivatives Exchange (NCDEX), said the market regulator, whose approval is needed for stake sales in bourses.
R-ADAG’s Reliance Money, a unit of Reliance Capital, will buy the stake from Indiabulls Financial Services Ltd, which owns 40 percent of ICEX, which was founded last year by state-run metals and farm commodities trader MMTC Ltd, two sources in Indiabulls said.
B.C Khatua, chairman of the Forward Markets Commission that regulates commodities exchanges, confirmed there was a proposal to sell equity to Reliance Money but he did not say how much stake would be sold.
“Yes Indiabulls has approached us… They want to surrender their anchor-investor (main equity holder) status to Reliance Money,” Khatua said.
He also said the regulator was considering a proposal from Jaypee Capital Services to acquire a 26 percent anchor investor stake in NCDEX.
Analysts said the entry of large business groups such as R-ADAG would help boost the exchanges’ turnover.
“Investors are expecting valuations to go up if there are reforms in this sector. The entry of players like Reliance will drive up trading volumes,” said Gnanasekar Thiagarajan, director, Commtrendz Research.
India has four commodity bourses – National Commodity and Derivatives Exchange (NCDEX), Multi-Commodity Exchange (MCX), National Multi-Commodity Exchange, and ICEX – which operate at the national level.
A fifth bourse ACE Derivatives and Commodity Exchange, promoted by Kotak Mahindra Bank, has been given national level commodity exchange status last week and would launch operations in a month’s time.
India, which allowed futures trading in commodities in 2003, has one of the fastest growing commodity futures markets and had a combined turnover of 77.65 trillion rupees in the 2009/10 fiscal year ending March.
The growing turnover has attracted several investors such as Goldman Sachs that bought 4 percent stake in NCDEX through a Mauritius-based investment arm and InterContinental Exchange that also holds a 4 percent stake in the same exchange.
NYSE Euronext, Fidelity International, Aginyx Enterprises, Intel Capital, and Passport India Investments own stakes in rival MCX, India’s biggest commodities exchange.
Foreign investors are allowed to hold up to 5 percent equity in local commodities’ exchanges.