FTIL sells Singapore arm for $150 mn

Embattling a major crisis at its group entity NSEL, exchange operator and technology provider Financial Technologies (FTIL) today announced sale of its Singapore-based bourse SMX for $150 million (Rs 931 crore) to US-based InterContinentalExchange (ICE).

Jignesh Shah-led FT Group had launched Singapore Mercantile Exchange (SMX) with much fanfare over three years ago in August 2010 as a pan-Asia trading platform for various commodities including metals, energy, currency and agriculture commodities. FTIL would use sale proceeds to retire debts.

FTIL, the main holding firm for Shah-led group that has also set up Indian exchanges like commodity bourse MCX, stock exchange MCX-SX and now crisis-hit NSEL (National Spot Exchange), held its stake in SMX through a wholly owned subsidiary Financial Technologies Singapore Pte Ltd (FTSPL).

Reacting to the announcement, shares of FTIL soared by 11% to Rs 201.40 on the BSE in early trade. However, later the stock pared some of the gains and was trading at Rs 201.40, up 3.97% during afternoon trade.

In a regulatory filing to Indian stock exchanges where FTIL is listed, the company said FTSPL has reached an agreement to sell 100% of its equity ownership in SMX (together with its wholly owned subsidiary SMX CC) to ICE Singapore Holdings, an entity owned by US-based ICE group for $150 million.

The transaction was approved by the Board of Directors of FTSPL and FTIL yesterday with signing of definitive agreements and is subject to certain customary closing conditions and approvals, the company said.

FTIL will primarily utilise the proceeds towards repayment of outstanding debt towards External Commercial Borrowings (ECB) and Foreign Currency Loan (FCL) to banks subject to regulatory approvals, if any, pursuant to which FTIL will become debt/lien-free, it said.

The group has been going through a major crisis for past few months ever since a Rs 5,600-crore payment default came to light at NSEL, although various entities including SMX have been saying they were not affected by these developments.

Still, Indian markets regulator Sebi has already set up an expert panel to oversee key functions and operations of MCX-SX, while commodities market regulator FMC has served show-cause notices to FTIL questioning their 'fit and proper' status to run MCX.

The group also has exchange ventures in countries like Mauritius, Dubai, Bahrain and Africa.

SMX and its wholly owned subsidiary Singapore Mercantile Exchange Clearing Corporation (SMXCC) had said in early August that "the developments that have taken place in the last week at another Exchange of their group company Financial Technologies India Ltd (FTIL), have no impact on its business or any other factors including liquidity and risk bearing abilities.