Multi Commodity Exchange of India (MCX) is hoping to be second time lucky. After a failed attempt to go public three years ago when markets crashed in early 2008, half a dozen shareholders including promoter Financial Technologies (India) and a bunch of financial investors (state controlled banks and foreign investors) are selling part of their holding in the proposed public issue of MCX.

It would be one of the rare cases where the entire issue comprises of offer for sale. The valuation and pricing is yet to be worked upon but the issue will involve sale of around 6.4 million shares representing 12.6% of the post issue capital of the firm.

Other shareholders of MCX at present include Passport Capital, Euronext, Merrill Lynch, IFCI, NABARD, Intel Capital, New Vernon Private Equity, besides ad-for-equity investors HT Media and Bennett Coleman & Co in addition to several commercial banks and venture capital firms.

MCX is a leading commodities exchange in India based on value of commodity futures contracts traded. The total value of commodity futures contracts traded on its exchange during the nine months ended December 31, 2010 was Rs 68,89,318 crore, representing 83.3% of the Indian commodity futures industry in terms of the value of commodity futures contracts traded, according to data maintained by the FMC. MCX’s traded value of commodity futures contracts has more than doubled between FY2008 and FY2010.

For the six months ended September 30, 2010 MCX had total income of Rs 202 crore of which three fourth was from its operations. In the same period it has net profit of Rs 74.9 crore as against Rs 221 crore for the year ended March 2010.


Three years ago, MCX had planned a mix of fresh issue and offer for sale in which Financial Technologies and Corporation Bank had offered to sell part of their shares. The fresh issue comprised of 6 million shares while 4 million shares were offered for sale, largely by Financial Technologies.

The firm was looking to raise over Rs 300 crore and was thereby eyeing a valuation of more than Rs 500 per share. The firm has grown since then though its earnings has not increased in tandem with revenues.

If MCX prices its issue around Rs 600 then it would be seeking a valuation of close to Rs 3,000 crore ($675 million). This would allow sufficient room for gains for most financial investors in the company, specially banks many of whom acquired shares at par value of Rs 10 each.

But everyone may not be so lucky. Many investors entered the company by purchasing shares from Financial Technologies just prior to its proposed IPO in early 2008. Some of these were struck at valuations of over Rs 1,000 per share namely shares purchased by GLG, Citigroup, Passport Capital, Merrill Lynch. Many others acquired shares at a price ranging between Rs 525-600, and the IPO may just provide some modest gains for them.

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