Nymex initiates talks to acquire 9% stake in MCX
Even as the government formulates the policy on foreign holding in Indian commodity exchanges, the US-based New York Mercantile Exchange (Nymex) has initiated discussions to acquire a 9% equity stake in the Multi Commodity Exchange of India (MCX).
According to sources, Merrill Lynch, which is also advising MCX on its proposed IPO, is running the deal on its behalf. While the transaction value under discussion is not clear, sources say, it could be upwards of Rs 270 crore ($60 million). There’s a freeze on shareholding patterns in all commodity exchanges till the government releases the new ownership rules.
MCX MD & CEO Jignesh Shah denied any such development. “Nymex is our strategic partner in India. On this issue, we would prefer not to comment,” he told ET. Nymex director-media affairs Anu Ahluwalia said, in response to an email query from ET, “As a matter of policy, Nymex does not comment on rumours and speculations.”
However, with some shareholders in the commodity exchange planning to sell, several foreign investors are looking to invest in Indian exchanges. Early this year, FII Fidelity International had picked up 9% in MCX for Rs 220 crore ($49 million). Sources say, Nymex was keen on picking up ICICI’s 7% equity stake in NCDEX, which was eventually acquired by Goldman Sachs.
MCX is India’s largest commodity exchange founded by Financial Technologies India that holds 64% in the entity. The balance is held by various state-owned and private sector banks. It accounts for 56% of the total Indian commodity and futures market with an average daily turnover of about $1.5 billion.
MCX, sources say, has been open to selling equity to global exchanges during the past few months. One name that did the rounds was Dubai Multi Commodities Centre (DMCC), which has a global alliance with MCX. However, the Indian exchanges are waiting for clarity on the FDI norms for exchanges.
Financial Technologies, an MCX executive told ET, would like to maintain a controlling stake of 51%. However, he added that things could change after talks with prospective bidders. MCX is also coming out with an IPO shortly, whereby Financial Technologies’ shareholding will be reduced to around 55%, he added.
Sebi recently issued guidelines for the BSE, proposing a cap of 49% on foreign holding, which includes 26% FDI and the balance 23% for FIIs. Industry anticipates that Sebi would maintain these norms for commodity exchanges in the country as well.
MCX has strategic alliances with both global and domestic companies and associations and sources close to it say they could materialise into equity holdings in MCX at a later stage. Apart from Nymex, some other possible global alliance partners include London Metal Exchange, The Tokyo Commodity Exchange, London-based Baltic Exchange and Chicago Climate Exchange.
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