MCX-SX promoters dilute stake, opt for capital rejig

The promoters of MCX Stock Exchange — Multi Commodity Exchange (MCX) and Financial Technologies (FTIL) — have resorted to reducing the exchange’s capital base and divesting their stakes to Indian banks and financial institutions to comply with Securities and Exchange Board of India (Sebi) guidelines.

Following this, MCX and FTIL will hold 5 per cent each in the MCX Stock Exchange (MCX-SX), as against over 25 per cent earlier.

The move will help MCX-SX, which launched currency futures in October 2008, start interest rate futures and equity businesses. Sebi rules mandate diversified shareholding for exchanges, with only stock exchanges, clearing corporations, depositories and financial institutions allowed to hold up to 15 per cent. Others can hold a maximum of 5 per cent stake in an exchange.

In a statement, the exchange said IFCI, which had acquired a 5 per cent stake for around Rs 250 crore, would now hold a little over 13 per cent. Similarly, Punjab National Bank and Union Bank of India, which acquired stakes before captial restructuring, would see their holding rise to 9.2 per cent and 11.5 per cent, respectively. The shareholders now include 18 banks and two financial institutions.

Sources said MCX-SX had to opt for capital restructuring as promoters were unable to find buyers willing to pay a premium of Rs 34 for every equity share that had a face value of Re 1. IFCI had acquired the shares at Rs 35 each, valuing the exchange at around Rs 5,000 crore, and was offered a downside protection.

While the exchange did not share the details of the capital restructuring or its new paid-up capital base, Jospeh Massey, MCX-SX Managing Director and CEO, said the net worth was around Rs 340 crore. “The exchange has completed the process through divestment and a scheme of reduction of capital according to the provisions of the Companies Act,” said a release from the exchange. “The exchange was accorded time up to September 2010 for compliance,” it said. The promoters had initiated talks with a host of overseas exchanges. But for the moment, the shareholding is almost entirely Indian.

In addition, the exchange has roped in half-a-dozen new directors, including Atul Rai, chairman & managing director, IFCI; Shahzaad Dalal, vice-chairman, IL&FS; M Narendra, executive director, Bank of India; SK Dubey, general manager, Punjab National Bank; S Rajendran, general manager, Union Bank of India; and CVR Rajendran, general manager, Corporation Bank.