Bullion Association eyes 5% FTIL stake in MCX through UCX

The Bombay Bullion Association (BBA), the premier trading body in the segment with around 800 members across the country, is hoping to collaborate with Universal Commodity Exchange (UCX) after the latter acquires the stake of Financial Technologies (FTIL) in Multi Commodity Exchange (MCX).

UCX is looking to form a consortium with BBA to acquire FTIL’s stake in MCX. BBA is eyeing 5 per cent stake in MCX, for which it has held talks with UCX. FTIL currently has the anchor investor’s stake of 26 per cent in MCX. It will have to divest this, in line with an order of the Forward Markets Commission (FMC) last week, followed by an MCX board decision to comply.

“We held the first round of meetings with the promoter of UCX, which was successful. After acquiring the stake, we will work towards betterment of the commodity futures business,” said Mohit Kamboj, president of BBA. If successful, this will be BBA’s first corporate investment, though individual members hold equity stake in several companies.

Attempts to reach Ketan Seth, promoter of UCX, weren’t successful. Seth, however, on Tuesday said UCX had got support from its existing stakeholders — banks, foreign institutional investors and mutual funds — for acquiring the FTIL stake. He did not elaborate when asked about the possibility of a clash of interest, as both MCX and UCX are national trading platforms, in a wide gamut of commodities.

BBA, said one of its directors, has Rs 10-12 crore as reserves. Valuation beyond these will be met through fund raising from members. “We were offered two per cent stake at Rs 15 a share when MCX was launched. Many members opposed the offer. Now, we don’t think the valuation per share will be less than Rs 600; still, members are interested. We fail to understand the logic,” said a BBA director, on condition of anonymity.

Finding FTIL not “fit and proper” to hold an anchor investor’s stake, the FMC ordered it to reduce stake from the existing 26 per cent in MCX to no more than two per cent of the paid-up equity capital. FTIL has challenged the FMC order in the high court here.