Kotak may cut stake in Ahd Commex to 40%

The Kotak group will have to reduce its equity stake from current 51% to 40% in the Ahmedabad Commodity Exchange (ACE) within a year from the date of in-principle approval, as per the new guidelines issued for formation of national commodity exchange.

The forward markets commission (FMC) has accorded an in-principle approval to the ACE to upgrade and convert itself into a national multicommodity exchange on the basis of an application made in 2008.

With this in-principle approval, ACE has become the first regional commodity exchange to get the status. The permission has been granted on condition that ACE upgrades itself by replacing its ?open outcry? system with online trading.

After getting approval for status of national commodity exchange by regulator, the Kotak Group will soon initiate the acquisition process of the ACE in-line with FMC guidelines.

As part of its plan to become corporatised and demutualised national exchange, ACE had offered 51% equity stake to Kotak Mahindra Bank in January 2008. The acquisition price per equity share of ACE was decided at Rs 321.

?We have proposed to acquire equity stake of 51% in the exchange but as per the new guidelines, we will have to reduce our stake to 40% as an anchor promoter. Firstly, we will complete our acquisition process. We will also go for the demutualisation as per the guidelines,? T Raghunath, head of group strategy for Kotak told FE.

?I think it will take atleast one or two months to complete the process of acquisition and demutualisation,? he said.

There are three major national commodities exchanges in the country, Multi-Commodity Exchange (MCX), National Commodity and Derivative Exchange (NCDEX) and National Multi Commodity Exchange (NMCE).

Apart from these three commodity bourses, India Bulls and MMTC are also jointly setting up new exchange.

?It is an important milestone in the history of commodity exchange. We would transform ourselves from a regional to national player by undertaking demutulisation process and implementing online trading system,? Pravin Thakkar, president, ACE said.

ACE, which currently trades in castor seed and cotton seed with a daily turnover of Rs 25 crore, may introduce all permitted commodities including bullion on its platform in a phase manner, he added. The exchange currently has 212 members.

As per the new guidelines, the regional commodity exchanges are not permitted to list more commodities unless the trading system is online.

In 2008, the exchange passed a resolution and proposed to issue and allot to Kotak Mahindra Bank and/or its associates or subsidiaries up to 1.02 lakh equity shares at a price of Rs 321 per equity share and up to 10.50 lakh share warrants. ACE convened an extraordinary general meeting on February 2008 to seek its shareholders approval for offering stake to Kotak Mahindra Bank.