MMTC board okays 10% stake sale in ICEX

Government-owned MMTC has informed the BSE that its board of directors had approved the proposal for sale of 10 per cent stake in Indian Commodity Exchange (ICEX), the now defunct bourse it jointly promoted with Indiabulls Financial Services.

MMTC holds 26 per cent stake in ICEX. To meet the shareholding guidelines of the Forward Markets Commission (FMC), Indiabulls had sold its 26 per cent stake to Reliance Exchange Next in January 2011. With this, Indiabulls is left with only 14 per cent stake.

Acting as an advisor for this transaction, YES Bank issued an Expression of Interest (EoI) in August for sale of MMTC’s full or part stake in ICEX. The minimum reserve price and the minimum number of shares to be acquired in the proposed bidding shall be Rs 10 per share and two million shares (equivalent to one per cent shareholding in ICEX), respectively.

According to the announcement, only two bidders participated in the global EoI and both were selected. At the minimum price, the valuation of the deal  could be Rs 10 crore each.

Ramesh Shetty, spokesperson of ICEX and Kanishka Garg of YES Bank did not divulge details of the deal. While Shetty termed the deal a private one between two parties, Garg said, “The deal is not yet approved and, hence, it is premature to say anything.”

Within three years of operation, ICEX started incurring losses owing to the lack of innovative contracts available for trading resulting into lowering of its minimum net worth requirement of the regulator.

ICEX, meanwhile, assured FMC it would revive the exchange with fresh capital infusion from the existing shareholders and issue a rights issue to raise funds from outside the purview of existing shareholders.

According to sources, existing shareholders denied pumping in fresh capital for revival of the exchange.