Not everyone has turned bearish about the global financial market. Reliance Money, the retail brokerage and distribution company of Reliance Capital, is particularly bullish about overseas trading exchanges. The R-ADAG company, after picking 15% stake in Hong Kong Mercantile Exchange(HKMEx) last month, is now in serious negotiations to begin a fresh exchange in Nigeria which will offer commodity and currency contracts to begin with and may evolve into a full fledged trading exchange going forward. The firm has also just roped in Rajnikant Patel(former MD & CEO of BSE) as President- Exchange Business.
Reliance Money will own the majority stake in this Nigerian venture. Other local business groups in the African nation including the local partner of Reliance Money, the Chellarams are likely to be minority equity partners. The proposed exchange will start operations by second quarter of 2009, around the same time when HKMEx is expected to go live.
The new exchange in Nigeria would bring some competition for the existing Nigerian Stock Exchange which is based in Lagos. The new exchange would be developed on the lines of NSE which changed the dynamics of the stock trading in India in the 90s when BSE was struggling to provide new age trading experience.
Reliance Money has been pretty active building exposure in commodity exchanges both in India and abroad. Besides picking a minority stake in HKMEx, it recently got a nod from the government to pick 10% stake in Ahmedabad-based National Multi-Commodity Exchange(NMCE) and plans to acquire upto 26% in NMCE.
With an experienced hand like Rajnikant Patel joining the group, the exchange business could well get a fillip for R-ADAG. As the chief of BSE, Patel was responsible for the corporatisation and demutualisation of one of the oldest stock exchanges in Asia. Besides BSE, he has also had stints with the banking regulator, RBI, BNP Paribas, State Bank of Saurashtra and Bank of Maharashtra. A member of the working committee of the World Federation of Exchanges, he was also one of the longest serving chairman of South Asian Federation of Exchanges (SAFE).
Reliance Money's Nigerian exchange plan appears to be on the same lines as its exposure in HKMEx. The firm had sometime back struck a deal with a Hong Kong company for financial products distribution and followed up with a stake in HKMEx to broaden base in the region. Similarly, in July this year Reliance Money had tied up with Lagos-based industrial group Chellarams for distribution of financial products and services. Now it is in talks with the Nigerian authorities who are keen on developing a new modern trading exchange.
However, unlike HKMEx, where the local government has an equity stake, in Nigeria the exchange is going to be a private enterprise with Reliance Money holding more than 50% of the equity.