PE-backed MCX Completes IPO, Biggest Public Issue In Seven Months

17 August, 2016

Private equity-backed commodity bourse company Multi Commodity Exchange of India (MCX) has completed its initial public offering (IPO) with the issue getting oversubscribed more than 53 times on the last day. It had previously got commitment of Rs 95.6 crore ($19 million) from a group of 12 anchor investors.

The issue was subscribed fully in early hours of day 2 of the issue on Thursday. The issue closed on February 24.

The anchor investors in the IPO include Kuwait’s sovereign wealth fund and investment management firm Wellington Management, besides a string of mutual fund and other financial investors such as Blackrock Global, Deutsche Securities, Tata AIG Life, ICICI Prudential, Acacia, etc. The anchor investors subscribed to shares priced at Rs 1,032 a piece – the upper end of the price bracket of Rs 860-Rs 1,032, set for the IPO.

This is the biggest IPO since L&T Finance Holdings raised over Rs 1,200 crore in its maiden public float last July. Last month a small healthcare firm Goodwill Hospital & Research Centre had to withdraw its public issue after poor response from investors.

The public issue entirely comprises sale offer by existing shareholders (including its main promoter Financial Technologies (India) Ltd) who offered 6.4 million shares for sale, accounting for 12.6 per cent stake.

For the nine months ended December 31, 2011, MCX had total income of Rs 474 crore and net profit of Rs 220 crore. Given that the company is looking at a valuation of over Rs 5,200 crore ($1.05 billion) at the upper end of the price band, it sought a price earnings multiple of around 18 times its trailing net profit on an annualised basis, according to VCCircle estimates.

The total value of the commodity futures contracts traded on the MCX exchange in the nine months ended December 31, 2011, stood at Rs 11,980,689 crore. According to data maintained by the FMC, this represented 87.3 per cent of the Indian commodity futures industry in terms of the value of commodity futures contracts traded during the period.

Financial Technologies (India) Ltd, State Bank of India (Equity), GLG Financials Fund, Alexandra Mauritius Ltd, Corporation Bank, ICICI Lombard General Insurance Company and Bank of Baroda are the selling shareholders. Together, they own 44.11 per cent stake in the company. Financial Technologies will reduce its holding to 26 per cent to meet the shareholding norms for commodity bourses while others will sell a part of their respective holdings.

Other shareholders of MCX include Passport Capital, Euronext, Merrill Lynch, IFCI, NABARD, Intel Capital and New Vernon Private Equity, besides ad-for-equity investors HT Media and Bennett, Coleman & Co, as well as ICICI Venture and Kotak Private Equity, among others.

Morgan Stanley, Citigroup and Edelweiss Capital were the book-running lead managers to the issue.

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PE-backed MCX Completes IPO, Biggest Public Issue In Seven Months

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