Dec 16, 2006

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

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

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.

No comments: