Are institutional investors looking to exit MCX?

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Are institutional investors looking to exit MCX?

There has been some buzz in the markets and media reports have been saying that institutional investors in the Multi Commodity Exchange of India Ltd (MCX) need an exit at this point in time. The company terms media reports speculative and unsubstantiated.

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Excerpts from Markets Midday on CNBC-TV18 Watch the full show » ALSO READ See what other experts are saying about markets See what FIIs are saying about the markets See what Udayan Mukherjee is saying about the markets BSE | NSE 01/01/70 Are Mutual Funds betting on ? Other Stocks in this news Citi Port Financial Services | DSP Merrill Lynch | HSBC InvestDirect (India) | Financial Technologies |

There has been some buzz in the markets and media reports have indicated that institutional investors in the Multi Commodity Exchange (MCX) want to exit at this point in time. The company terms media reports speculative and unsubstantiated.

Here is a verbatim transcript of Haresh Soneji's comments on CNBC-TV18. Also watch the accompanying video.

Also Read: Buy Crude MCX at Rs 2700 per barrel

The report said Fidelity Funds Mauritius holds 9.2% stake in MCX and Citi , which holds 5% stake in MCX, is looking at an exit. Moreover, market sources also say that Merrill Lynch and IL&FS , which also hold 5% each, are looking for an exit from MCX.

MCX is the unlisted arm of Financial Technologies (FT). This media report gets its inputs from the draft red herring prospectus (DRHP) filed by the MCX in February 2008, when they were going to go public. This DRHP states that the exchange will make efforts to arrange to sell the stake if it goes public within a stipulated period of time. This stipulated period differs from various investors ranging from March 2008 to June 2009-where it is eligible to go public to these various investors, FT has an option to buy these shares back from these institutional investors, at a price not lower than the price which these institutional investors have subscribed. 

As of March 2008, FT reserves stand close to about Rs 1,500 crore. But then, those are media reports and that is speculative, for which, FT has released an official release to the exchange clearly mentioning that these media reports are speculative and unsubstantiated. These reports have twisted facts without reconciling current position. FT says that are many developments taking place post the Securities and Exchange Board of India (Sebi) filing and the failed pubic issue.

Therefore, that is one leg for FT, the group company MCX. Another development of the group company FT is that, incidentally, a block deal happened on Friday of 9.6% share, which Fidelity sold over the exchange at Rs 500 per share. Our sources say that till now, close to 5.45% stake has already been bought by Reliance Mutual Fund.