Comments
Multi Commodity Exchange has sold 3.05 crore warrants of MCX Stock Exchange (MCX-SX) to Infrastructure Leasing and Finance Services (IL&FS) for ₹7.63 crore. The warrants were converted into a similar number of equity shares of ₹1 each.
Near-double price offerWith the present deal, IL&FS will enhance its holding in the stock exchange back to 5 per cent from 2.88 per cent and will own 5.84 crore equity shares, said sources. IL&FS’s stake holding in the exchange was diluted due to fresh capital infusion.
The price of ₹2.50 a warrant paid by IL&FS was higher compared with ₹1.50/warrant shelled out by ace investors including Rakesh Jhunjhunwala and 11 others in a similar deal with Financial Technologies last November.
Name change, locationThe improvement in valuation indicates that the exchange is recovering from the trouble created by its erstwhile promoter Financial Technologies which was declared not ‘fit and proper’ to hold stake in exchanges after its group company, the National Spot Exchange, failed to settle trades worth ₹5,600 crore entered on its platform.
In a bid to move away from the shadow of its earlier promoter, the stock exchange decided to change its name to Metropolitan Stock Exchange of India and shifted its office to Bandra Kurla Complex. It also moved its data centre to Tata Communications and improved trade latency.
Post the IL&FS deal, MCX would hold 58.26 crore warrants and 4.10 per cent equity stake in MCX-SX. If the remaining warrants owned by MCX are converted into equity shares it will be left with 33 per cent holding in MCX-SX.
The commodity exchange has to covert the warrants before June and was, being an entity governed by the Forward Contracts Regulation Act, directed by SEBI to cap its holding at 5 per cent after conversion.
MCX had initiated the process of divestment last year and urged the regulator to ease the holding limits up to 15 per cent. Incidentally, the Centre had proposed to merge commodity market regulator Forward Markets Commission with SEBI, a move that will provide a deemed stock exchange status to all the four commodity exchanges — MCX, NCDEX, NMCE and Ace Derivatives and Commodity Exchange.
This apart, these exchanges will be regulated by the Securities Contracts (Regulation) Act, 1956, which allows recognised stock exchanges to hold up to 15 per cent stake in its peers.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.