BSE, NMCE in pact to pick up 26% stake

Written by Commodities Bureau | Mumbai, Feb 25 | Updated: Feb 26 2008, 07:01am hrs
Bombay Stock Exchange (BSE), the oldest stock exchange in Asia, on Monday signed an agreement to pick up 26% stake in Ahmedabad-based National Multi-Commodity Exchange of India (NMCE).

NMCE is the countrys first demutualised and third-largest online commodity exchange. The agreement to formalise the deal was signed by Rajnikant Patel, managing director and chief executive officer, BSE and Kailash Gupta, managing director, NMCE in the presence of BC Khatua, chairman, Forward Markets Commission (FMC). This is the first foray of BSE in the commodities market. This alliance will provide NMCE to leverage the large network of BSE. On asked about the value of the deal, Patel said, There is a confidentiality clause in the agreement but I can tell you that the BSE will acquire 52.70 lakh shares in the exchange that work out to 26% of the NMCE. The acquisition will be through fresh issue of shares. NMCE will infuse the fresh equity share of Rs 100 cores and will offer its shares to BSE and other institutions. This deal is on the basis of transaction value, not the enterprise value. The fresh equity would lower the stake owned by Neptune Overseas Ltd, main promoter of the exchange, from 25% currently to 18%-19%, Gupta said. This acquisition by BSE is a step forward to consolidate its position in the financial market place. BSE has already acquired 5% stake in Calcutta Stock Exchange. BSE's foray into the commodities market space will bring 133 years of expertise, the global brand value, technology, best corporate governance practices and nation wide reach.

It denotes BSE's expanding horizon in the financial market space, Patel said. The alliance between the two exchanges will be of mutual benefit and will facilitate BSEs entry into commodities trading while it will help NMCE to increase its market share.