A consortium of investors led by Universal Commodities Exchange (UCX) and which includes bullion trade body Bombay Bullion Association (BBA) has approached the commodities derivatives regulator Forward Markets Commission (FMC) with a proposal to buy 24 per cent stake in MCX, the country’s largest commodity bourse.
This could be in the form of the consortium buying MCX promoter Financial Technologies’ (FTIL) stake.
Shares of MCX rose around 3 per cent in the early morning trades on the Bombay Stock Exchange in a strong Mumbai market on Thursday.
The consortium, put together, intends to buy 24 per cent stake, of which BBA will hold around 5 per cent, as per the proposed deal. At present, this 24 per cent stake is worth Rs 621 crore or around $100 million.
According to UCX promoter, Ketan Sheth, he has been approached by several private equity funds and institutional investors who are keen on a strategic stake in MCX and wanted a person familiar with the commodities exchange business. UCX involvement could be tricky as FMC norms do not allow any promoter to be involved in more than one exchange.
The development follows an order by the commodities regulator that directed Jignesh Shah-prompted FTIL to bring down its stake in the exchange to 2 per cent from the current 26 per cent within a period of one month. It said FTIL and Shah were unfit to operate an exchange in the country in light of the scam in group concern NSEL early this year.
MCX board had also said that it has asked its promoter FTIL, which in turn is backed by private equity firm Blackstone, to cut its stake in line with FMC order.
On the other side Shah and FTIL have moved Bombay High Court seeking immediate stay on the FMC's order. 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 recognised by the Indian government and FMC. The writ petitions will be heard by the court on January 6, 2014.
(Edited by Joby Puthuparampil Johnson)