MCX board asks Blackstone-backed Financial Technologies to cut stake

India's largest commodity exchange Multi Commodity Exchange of India Ltd or MCX has asked its promoter Financial Technologies India Ltd (FTIL) to bring down its shareholding in the public listed commodity bourse to 2 per cent from the current 26 per cent within one month, in accordance to an order by commodity markets regulator Forward Markets Commission (FMC).

This stake is worth around $90 million at present.

Last week, FMC had said that FTIL and its chairman Jignesh Shah are not fit and proper to operate an exchange, following the Rs 5,500 crore payment crisis at group company National Spot Exchange Ltd (NSEL).

Two days later, Shah filed a writ petition in the Bombay High Court to cancel  FMC’s order, seeking immediate stay on the order. Besides Shah, Shreekant Javalgekar -- a former managing director and CEO of MCX -- and Joseph Massey -- a former managing director and chief executive officer of MCX Stock Exchange Ltd and a former director of MCX -- also challenged the regulator’s order through a writ petition in the court. These two were also declared unfit to hold any management position in any exchange recognized by the Indian government and FMC.

The writ petitions will be heard by the court on January 6, 2014.

MCX has also asked FTIL to withdraw the representation of Miten Mehta on its board, in line with FMC’s direction.

MCX was founded by Shah in November 2003. Shah is currently chairman of FTIL which owns and operates NSEL. FTIL currently has a 26 per cent stake in MCX, while Shah owns 18.08 per cent equity stake in FTIL.

Private equity giant Blackstone is to pick up 3 more per cent stake in MCX through market deals to increase its stake to 4.99 per cent. The proposed stake purchase comes after Blackstone picked up 2 per cent stake in India's largest commodity bourse for Rs 104 crore in March this year.

The move would make Blackstone the largest non-promoter shareholder in MCX ahead of IFCI and Aginyx Enterprises Ltd, which hold 4.79 per cent each. Other shareholders in MCX include Valiant Capital, Intel Capital, NYSE Euronext, Fidelity and GIC Singapore.

Blackstone also happens to be a shareholder of FTIL and as of September 30, 2013 held 7 per cent stake. CVCI is another shareholder of FTIL, holding around 4.3 per cent stake.

Leave Your Comment(s)