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Sale of FTIL's stake in bourses to yield Rs 70 cr

Sebi has given FTIL 90 days to offload shares

BS Reporter  |  Mumbai 

Financial Technology

Financial Technologies (India) Ltd (FTIL), which has been asked by the Securities and Exchange Board of India (Sebi) to sell the shares it owns in various bourses, could get at least Rs 70 crore if it were to offload the stakes at cost value. Sebi had asked FTIL to offload its stakes in four exchanges and a clearing corporation, after deciding it did not meet the criteria for a ‘fit and proper’ entity to be a stakeholder. FTIL has a stake in MCX Stock Exchange (MCX-SX), MCX Stock Exchange Clearing Corporation, Vadodara Stock Exchange, National Stock Exchange of India and Delhi Stock Exchange. None of these are listed entities. However, shares of some are traded with some prices available on an informal basis. The stakes in the regional exchanges are likely to bring only nominal amounts, according to calculations based on estimates from those facilitating such transactions. Shares of the Delhi Stock Exchange are traded at an average price of Rs 10, valuing the 1.4 million shares owned by FTIL at Rs 1.4 crore. Shares of Vadodara Stock Exchange Ltd are traded less frequently, but one vendor put the going rate at Rs 5 per share. This would value FTIL’s 2,90,000 shares at Rs 14.5 lakh. IDFC sold shares in the National Stock Exchange at Rs 4,200 each. Another vendor put the rate at Rs 3,600. The average of these two figures would value FTIL’s 10,000 shares at Rs 3.6 crore. Shares in MCX-SX and in its clearing corporation are harder to value.

There is no trading in either since they are closely held. However, FTIL’s annual report puts the cost value at Rs 2.71 crore for its stake in MCX-SX. It valued warrants at Rs 56.24 crore. The clearing corporation was valued at Rs 5.75 crore. “The exchange has been running losses and there is a lot of uncertainty over its operations. It is very difficult to put a number to it,” said an analyst who has tracked FTIL. MCX-SX plans a rights issue offering investors two shares for every one that they hold. It plans to raise Rs 544.7 crore through the offer, valuing each share at Rs 5. This would value FTIL’s stake in the company, including its shares and warrants, at a few hundred crore. FTIL would have held 33.86 per cent in the company if its warrants were to be converted before the rights issue. An email sent to FTIL did not receive a reply.

Minimum Value Of FTIL Holdings
Entity Valuation(Rs. Crore)
DSE 1.4
VSE* 0.145
MCX SX* 2.71
Warrants* 56.24
Clearing* 5.75
TOTAL 69.845
*Valuation as per annual report
Source:Brokers For Unlisted Shares, FTIL Annual Report

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First Published: Wed, March 26 2014. 22:46 IST