NYSE Euronext may exit MCX

Will give over 100% profit in less than 3 years on its investment in MCX

NYSE Euronext (NYX) which acquired 4.79% stake in the Multi Commodity Exchange (MCX) in June 2008, may exit India’s largest commodity exchange. The exit by the world’s leading and most diverse financial market group will give over 100% profit in less than three years on its investment in MCX.

Since the investment was made prior to the exchange’s IPO, the deal if takes place will only be announced after completion of one year of the IPO which may happen in around second week of March.

NYSE Euronext had acquired 39.07 lakh shares from the promoter group at Rs 559 a share aggregating Rs 218crore at an enterprise value of above $1.1 billion. The share acquisition was announced completed on July 2, 2008.

The MCX spokesperson neither confirmed nor denied the deal. “No comment,” was his response when quizzed about the deal.
“NYSE Euronext must have exited from the exchange due to profit,” said an analyst.

MCX entered the capital market in February last year with a price band of Rs 860 - 1,032 per share for the IPO. But, the final price was fixed at the top end at Rs 1,032 given the strong demand witnessed for the offer. The anchor investors were also allocated shares at the same price. The share was listed with a premium of 34% on strong demand from investors.

Since, the promoter group of the exchange enjoys an anchor investor’s stake of 26% in MCX, NYSE Euronext had to look for an investors who can buy its stake. According to informed sources, a US – based multinational company has evinced interest to buy NYSE Euronext’s stake in MCX.

The buyer’s identification, however, could not be ascertained.

Sources believe, the deal has been finalized and awaits approval from the commodity derivatives market regulator the Forward Markets Commission (FMC).

Apart from that, FID Funds (Mauritius) Ltd, Myrrill Lynch Holdings are two other foreign institutional investors (FIIs) in MCX with equity holding of 5% and 4.79% respectively.

MCX’s share closed at Rs 1329.40 on the BSE on Monday, a marginal decline from Rs 1,351 on Friday.