As the markets and the economy have started booming again, foreign investors are back in business. Nowadays, their attention is primarily centering around the Indian exchanges such as the National Stock Exchange (NSE), National Commodity & Derivatives Exchange Ltd (NCDEX) and Multi Commodity Exchange Ltd (MCX).
US-based hedge fund Tiger Holding is set to acquire 2% stake owned by Stock Holding Corporation of India (SHCIL) and another investor in the NSE, in which Soros Funds is learnt to have acquired 1% stake owned by SHCIL. Sources in the know said the seller could be LIC. The deals value the NSE at over $3 billion. In June this year, Norwest Venture Partners (NVP) picked up a 2.11% stake in the NSE in a secondary transaction for Rs 250 crore, at an overall valuation of about Rs 12,000 crore.
Sohil Chand, managing director, NVP, said, ?On a macro perspective, Indian economy keeps growing and the stock market also grows in line with it. The NSE is a leader among the global exchanges and is the most credible exchange in India. Also, the trading volume as well as valuation has gone up tremendously.?
Following the Press Note issued by the ministry of commerce last year allowing foreign investors to hold not more than 5% stake in a local commodity bourse, Goldman Sachs (2%) and Intercontinental Exchange (3%) together sold their 5% stake in NCDEX to Shree Renuka Sugars for about Rs 36 crore, valuing the exchange at Rs 730 crore by the end of the last month.
Crisil Ltd, Indian subsidiary of US-based Standard & Poor’s, which holds 12% in NCDEX, is also set to reduce the stake to 5%. It has appointed JM Financial as the advisor. The other shareholders in NCDEX are NSE, LIC and UTI with 15% stake each, while Iffco holds 12%, and
Punjab National Bank and Canara Bank has 8% each.
Vijay Kumar, chief business officer, NCDEX, told FE, ?India is globally positioned with China, Brazil and Russia to dominate the world economic atlas in the next few years. Therefore, foreign investors have an increasing interest in everything that is Indian–be it telecom, power, consumer goods, retail, stock markets and commodity exchanges. The significant strides taken by NCDEX in the last six years or so to drive home the benefits of commodity trading to market participants and the potential shown to influence the income of farmers make the exchange an exciting proposition for foreign investors.?
Fidelity International, which had picked a 9% stake in MCX for $49 million with the exchange valued at $518 million in February 2006, will also sell out the remaining 4% before the deadline of March 30, 2010. A spokesperson from Fidelity International declined to comment on the development.
In July 2009, Financial Technologies India sold 5% stake in MCX at Rs 35 a share to IFCI for Rs 250 crore, with the valuation of the exchange at Rs 5,000 crore.
