FTIL sells residual MCX stake, exits flagship commodity derivatives biz

Aug 28 2014, 04:34 IST
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SummaryThe Jignesh Shah-promoted Financial Technologies sold its residual 5% stake in the Multi Commodity Exchange (MCX) through open market orders on Wednesday.

The Jignesh Shah-promoted Financial Technologies sold its residual 5% stake in the Multi Commodity Exchange (MCX) through open market orders on Wednesday. With this liquidation, the company has now completely exited the commodity derivatives exchange that it promoted a decade back.

“Post the above selling and subject to unlocking of balance shares by the MCX to complete the condition precedent of share purchase agreement (SPA), the company holds NIL shares in the MCX,” said FTIL in a filing to exchanges.

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While details of the entire stake sale was not available on exchanges, as per Bloomberg data, about 17.01 lakh MCX shares were sold in various block deals at an average price of R825.83. The BSE data showed that SBI Life Insurance picked up 3.43 lakh shares at R28.7 crore.

Meanwhile, the MCX scrip rallied 5.1% to R586.85 as the market regulator Forward Markets Commission (FMC) cleared Kotak Mahindra bank’s proposal to buy a 15% stake in the MCX from FTIL for R459 crore.

The deal was announced on July 21,2014, and was the third transaction carried out by FTIL to bring down its stake in the MCX to follow an FMC order that required it to bring down its stake in commodity derivative exchange.

In early July, FTIL sold about 6% stake through block deals in two trading sessions for a combined value of about R221.3 crore. Veteran stock market investor Rakesh Jhunjhunwala had bought 10 lakh shares, nearly 2% stake, of the MCX on July 8.

In December last year, FMC deemed FTIL — also the holding company of the R5,600-crore scam-hit National Spot Exchange (NSEL) — to remain an anchor investor in the MCX and asked to lower its stake from 26% to 2%.

While the Bombay HC refused an interim stay on this FMC order, a further revision in the rules announced in May this year required FTIL to completely exit its ownership in India’s most profitable commodity derivatives exchange. Meanwhile, the MCX changed its articles of association and transferred shares representing the FTIL ownership in an escrow account after getting shareholders’ approval.

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