Reliance Money may up stake in NMCE by 5%

Anil Ambani-run Reliance Money may acquire 5 per cent more in the National Multi-Commodity Exchange of India (NMCE) to take its holding to 15 per cent in line with the new guidelines. 

“According to the new guidelines issued by the Forward Markets Commission (FMC), we can take an additional 5 per cent stake in NMCE,” said Reliance Money Managing Director Sudip Bandyopadhyay. 

The NMCE board meeting, which could take place in the next two months, would decide on the exchange’s fund-raising plans, said Bandyopadhyay. Last year, Reliance Money had acquired 10 per cent in NMCE. The new FMC guidelines say that no single investor can hold more than 15 per cent. 

“This means we have scope to increase our stake by 5 per cent,” Bandyopadhyay said. The FMC circular said every commodity exchange should have a minimum paid-up capital of Rs 50 crore and a minimum net worth of Rs 100 crore by September 2010. 

“In accordance with the new guidelines, NMCE needs to expand its capital to Rs 50 crore within the next one year. NMCE may come out with preferential (allotment of shares) or some kind of offer,” Bandyopadhyay said. 

NMCE had earlier said it was in talks with a couple of Indian private equity players and foreign institutional investors for a stake sale to meet its working capital needs. 

The exchange is planning to raise money from the market through preferential allotment of shares. “Since Reliance Money can take only 5 per cent more, we need to have more investors in NMCE,” he said. 

On the time-frame for raising the stake, Bandyopadhyay said, “Reliance Money will be freezing its future roadmap in the next couple of months and the process has to be completed by September 2010.” 

On future plans, he said the daily turnover at NMCE shot up from Rs 200 crore to Rs 1,000 crore after Reliance Money acquired the stake last year. 

The exchange would launch more contracts and revamp several existing ones, making itself more contemporary and relevant, Bandyopadhyay said. 

He advocated participation of companies, institutions and foreign players in commodities trading saying this would increase volumes and deepen the market. 

On how the poor monsoon could impact the commodity sector, the Reliance Money chief said it might have an impact on some commodities. 

The kharif crop had definitely been affected but the rabi crop was expected to be good provided the monsoon improved, he said.