Merrill Lynch, Citi pick up 10% in MCX

MUMBAI: Global financial services majors Merrill Lynch and Citigroup have each picked up a 5% stake in Multi Commodity Exchange (MCX), the country's biggest commodity exchange, for about Rs 240 crore each. The stake buying by the two companies valued MCX at about $1.1 billion, or Rs 4,400 crore.

Along with Merrill Lynch and Citigroup, two other foreign funds—Passport India Investment (Mauritius) and GLG Financials Fund— will also buy stakes in the company. While Passport India bought 3% stake, GLG Financials bought 2% in the bourse. The total 15% stake bought by the foreign funds was offloaded by Financial Technologies India, the parent company of MCX, for about Rs 720 crore. Post this transaction, FTIL's shareholding in MCX will come down to 49%.

FTIL plans to invest the sale proceeds in its greenfield ecosystem ventures such as National Spot Exchange (NSEL), National Bulk Handling Corporation (NBHC) and other ventures in the pipeline, a company release said. These investments would provide Indian commodity markets and MCX access to global know-how and technology making them more efficient, competitive and transparent institutions globally, it said.

The divestment by FTIL in MCX has come even though the government is yet to formulate norms on regulating foreign equity in Indian commodity exchanges. In the absence of any guideline, the commodity market regulator Forward Markets Commission had asked the exchanges to maintain status quo till proper guidelines were issued. MCX officials said approval has been taken from FMC and other authorities. In this case, the stake sale has been approved on the condition that the parties have to conform to the guidelines when such rules are put in place.

SBI and its associate banks, HDFC Bank, Bank of India Canara Bank, Bank of India, Union Bank and Bank of Baroda together hold about 27% stake in MCX.