FTIL in talks to sell stake in ATOM, DGCX

Chairman asks shareholders to oppose govt pressure for merger of NSEL with parent

Financial Technologies (FTIL) has indicated it is exiting from its mobile transaction and payment gateway company, ATOM Technologies, by selling 95 per cent stake in it.

ATOM is a subsidiary of FTIL, formed seven to eight years earlier. FTIL has also indicated it is in the process of divesting from Boursa Africa and Bahrain Financial Exchange, beside its 27.3 per cent holding in Dubai Gold and Commodity Exchange. It has also signed an agreement to sell 25.64 per cent stake in Indian Energy Exchange.

FTIL Chairman Venkat Chary gave these indications in a letter addressed to its 68,000 shareholders. The letter asks them to oppose the Union ministry of corporate affairs’ suggestion of a merger of FTIL and its crisis-ridden subsidiary, National Spot Exchange (NSEL).

The background is the Forward Markets Commission’s order declaring the company not fit and proper to run or take stake in any exchange, following the Rs 5,600 crore payments default by 24 major borrowers of NSEL. After FMC’s order, regulators for other exchanges issued similar orders. FTIL has challenged the FMC order in court.

The merger suggestion came from the government, as a way of compensating the NSEL investors. Chary’s letter says FTIL has so far realised Rs 2,153 crore by selling various assets and the stake sale processes mentioned here were under discussion. Hence, says his letter, the shareholders should oppose the proposed merger, “as it is against the interest of FTIL shareholders and not legal, as NSEL is a limited liability company”.

FTIL has listed its cash and other asset positions on the BSE exchange. This says the FT Tower, where the company’s offices are situated, is worth Rs 500 crore and the book value of the company is Rs 614 a share. The shares are presently quoting at Rs 172.5. FTIL says the net cash after deducting debt of Rs 474 crore is Rs 1,585 crore, or Rs 344 a share.

The proposed merger has been challenged by FTIL, significant minority shareholders Bharat and Ravi Sheth and four banks (Syndicate Bank, Union Bank, Standard Chartered Bank and DBS Bank of Singapore).

THE SALE WAY OUT

• ATOM Technologies is a mobile transaction and payment gateway company
• It is a subsidiary of FTIL, formed seven to eight years earlier
• FTIL has also indicated it is in the process of divesting from Boursa Africa and Bahrain Financial Exchange, beside its 27.3 per cent holding in Dubai Gold and Commodity Exchange
• It has also signed an agreement to sell 25.64 per cent stake in Indian Energy Exchange
• The government suggested merging FTIL and NSEL, as a way of compensating the NSEL investors affected in a payments default case
• A letter from FTIL Chairman Venkat Chary to the shareholders asks them to oppose this suggestion