Commodity bourse operator Multi Commodity Exchange of India Ltd (MCX) will get to hike its holding in online trading platform Metropolitan Stock Exchange of India Ltd (formerly known as MCX Stock Exchange Ltd) after getting an approval from the regulator to exercise the options that will lead MCX to become the single-largest shareholder.
According to a disclosure, both the companies formed an agreement to bring the litigation related to 41.5 crore warrants of MSEI held by MCX to rest. Securities and Exchange Board of India (SEBI said it has no objection to the proposed exercise of option by MCX to subscribe and hold 26.5 crore equity shares of MSEI and MSEI allotting equity shares to MCX in lieu of warrants held by MCX, said the disclosure.
Blackstone-backed MCX will get to hike its holding in MSEI from 3.42% as of 30 June to 14.99% after conversion of the warrants into equity, according to VCCircle estimates.
As per SECC Regulations, stock exchanges are required to maintain a public shareholding of at least 51% of its paid-up equity share capital with individual limit being 5%. However, domestic stock exchanges, depositories, banking companies, insurance companies and public financial institutions are excluded and can hold up to 15% of the paid-up equity share capital.
Emails queries sent to MCX and MSEI did not elicit any response immediately.
MSEI's authorised share capital is Rs 350 crore divided into 350 crore equity shares of Re 1 each. The company during the year issued 60.7 crore equity shares on a rights issue basis in the ratio of 1:1 at par and 17.5 crore equity shares by way of conversion of the same number of convertible warrants, it said in its FY2015-16 annual report.
In July 2012, SEBI directed MCX to reduce its entitlement to equity or warrants in excess of limit of shareholding as specified in the regulations. In 2015, the board of MSEI decided to treat warrants held by MCX as extinguished and transfer the funds to capital reserve. Subsequently, MCX filed a suit in Bombay High Court to stop the implementation of the said extinguishment, according to information from the annual report.
As on March 31, 2016, MCX held 6.6 crore equity shares constituting 3.42% of the paid up capital and 41.5 crore warrants.
In June 2015, MCX sold 14.82 crore warrants of MSEI convertible into an equal number of equity shares of MSEI.
MSEI offers an electronic platform for trading in currency derivatives, interest rate derivatives, equity, equity derivatives and debt market segments.
The exchange is targeting a 25% market share of the bulk/ block deal segment and has more than 1,400 companies in the permitted-to-trade category. The count of the total listed companies increased from 82 companies in FY2014-15 to 161 in
FY2015-16. Of the 161 listed companies, there are 125 firms which are exclusively listed on MSEI.
The company's existing shareholders include Rakesh Jhunjhunwala, IFCI, IL&FS Financial Services, apart from a bunch of banks such as SBI, Axis Bank, Union Bank of India, Punjab National Bank, Bank of Baroda and Corporation Bank, among others.
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