FTIL inks new pact to sell 16.6% stake in IEX for $56M to Aditya Birla PE, others

Financial Technologies (India) Ltd (FTIL) has entered into a share purchase agreement to divest two-thirds of its remaining stake in Indian Energy Exchange (IEX) to a clutch of investors for Rs 357.06 crore (approximately $56 million), according to a stock market disclosure.

FTIL currently owns about 25.64 per cent equity stake in the energy exchange.

FTIL has signed the agreement with DCB Power Ventures Ltd, Kiran Vyapar Ltd, Agri Power and Engineering Solutions Pvt Ltd, Aditya Birla Private Equity for selling 16.6 per cent equity stake in IEX.

Last November, the company had signed a deal to sell its entire holding to a group of investors led by private equity firm TVS Capital for Rs 576.84 crore ($94 million), valuing IEX at Rs 2,250 crore ($366 million).

The new deal values IEX a tad lower at around Rs 2,150 crore.

FTIL said the previous agreement has been terminated due to non-fulfilment of certain conditions and a notice issued to the firm by Economic Offences Wing (EOW) of Mumbai in February stipulating not to divest its assets.

Recently, the Bombay High Court has stayed the EOW notice on the condition that FTIL has to deposit Rs 84 crore before the court from the sale proceeds of its shares in IEX within four weeks from the completion of such sale.

The new agreement, which is also subject to fulfilment of certain conditions, including buyout of the application and other technology for its own use by IEX and regulators’ approvals, if any, to be closed within 60 days, subject to certain technology-related conditions and regulatory approvals.

IEX offers an online electricity trading platform for trading, clearing and settlement operations. As per its site, over 800 private generators and more than 2,800 open access consumers are leveraging the exchange platform to manage their power portfolios.

It also counts several other private equity and venture capital investors including Multiples PE, Bessemer Venture Partners and Lightspeed Venture Partners.

In March 2014, FTIL sold off some stake in IEX to Golden Oak (Mauritius) Ltd, following which FTIL's shareholding in power exchange came down to 25.64 per cent.

The transaction was to comply with Central Electricity Regulatory Commission (CERC)’s regulations to bring down the company’s stake in IEX to 25 per cent as previously announced. As per FTIL annual report, this was to be met by January 20, 2014.

In May 2013, power sector regulator CERC had directed FTIL to offload its stake and exit IEX, following capital markets regulator Securities and Exchange Board of India's directive that declared FTIL and Jignesh Shah unfit to hold stake in any stock exchange or clearing corporation. FTIL landed in trouble after its subsidiary NSEL got into a payment crisis involving thousands of crores.

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