Indian commodity bourse valuation doubles as global firms buy in

The heightened activity in NCDEX’s unlisted shares comes as it planned diversification into equities and raised $87 million from global players, including Citadel Securities LLC and Tower Research

The unlisted shares of India’s National Commodity & Derivatives Exchange Ltd. have surged after investors including global high-speed trading firms bought stakes in the company ahead of its foray into equities.

Shares of NCDEX, India’s main bourse for trading agricultural products, are changing hands for as much as 485 rupees apiece in the unregulated market, people involved in such trades said, asking not to be identified as the information is private.

That’s more than double the price at which the company sold the shares to some investors on Aug. 28 and takes the exchange’s valuation to about $495 million.

The heightened activity in NCDEX’s unlisted shares comes as it planned diversification into equities and raised $87 million from global players, including Citadel Securities LLC and Tower Research. It underscores the interest in India’s financial markets, with investors trying to get exposure to companies even before their listing.

Gray market trading in India is often seen as a barometer of investor interest before a company’s debut.

A spokesperson for NCDEX declined to comment.

The bourse won a preliminary nod from India’s market regulator this year for trading in equity-linked products including derivatives. Its sale of minority stake to global firms is fueling expectations that the exchange will upgrade its technology and take some market share in the lucrative equities segment.

A push into equities will pit NCDEX against the country’s two dominant exchanges — the National Stock Exchange of India and publicly-traded rival BSE Ltd. The surge in interest underscores the appeal of bourses and brokerages in India, with the market regulator pushing for more competition in the derivatives segment.

The Securities and Exchange Board of India, however, has warned about speculative excesses as retail investors lost over $12 billion trading futures and options in the year ended March despite regulatory curbs on the retail frenzy.