Shree Renuka Sugars Ltd has hiked its stake in the country’s second largest agri-commodity exchange National Commodity & Derivatives Exchange Ltd (NCDEX) to 12%. The sugar company bought 7% stake from Standard & Poor’s backed rating agency CRISIL in a deal worth Rs 38 crore, valuing NCDEX at Rs 543 crore(~$ 120 million).
The company disclosed at the stock exchange that it has purchased 2.6 million shares of NCDEX from CRISIL Ltd at Rs 145 per share.
The transaction was to comply with new policy norms that do not allot foreign firms to own over 5% in a commodity exchange. CRISIL held 12% in NCDEX and had to reduce it to meet the norms. Earlier this year, Fidelity had pared its holding in the country’s largest commodity exchange MCX from 9% to 5% to comply with the norms.
NCDEX has also reportedly decided to sell 26% stake to Jaypee Capital through issue of fresh equity. If the deal is struck at the same price then Jaypee Capital will need to shell out around Rs 181 crore or $ 40 million. Jaypee Capital also has exposure in new currency exchange United Stock Exchange that has just commenced operations.
The fund raising at NCDEX is believed to enable the firm to meet minimum capitalisation norms. NCDEX has equity capital of Rs 37.5 crore and it needs to take it to Rs 50 crore.
Some reports have indicated that the fresh issue will be at a discount to recent share issue. They have also speculated that out of the 26% equity dilution, Shree Renuka Sugars may also participate to hike its holding further to 15% level.
Exchanges have seen a lot of investor interest in recent times partly to meet the new policy norms.
Besides the multiple transactions at work at NCDEX, Reliance ADA Group is also picking a large strategic stake in Indian Commodity Exchange(ICEX). The group has reportedly got the government’s nod to buy 26% of ICEX from one of the promoters, Indiabulls group.
Indiabulls Financial Services Ltd owns 40% stake at present with state controlled MMTC holding another large chunk (26%) in ICEX, the country’s fourth national commodity exchange that went live last year. ICEX, a derivatives exchange for commodities, is also backed by Indian Potash Ltd, KRIBHCO and IDFC.
Incidentally, Reliance ADA Group firm Reliance Capital already has an exposure in the spot commodity exchange business through Reliance Money that has a stake in National Multi Commodity Exchange of India Ltd (NMCE).