NCDEX, which is the market leader in agri-commodity trading has initiated preliminary discussions with merchant bankers to raise funds via an initial public offer, sources said.
The Life Insurance Corporation of India-(LIC) and National Stock Exchange (NSE)-backed multi-commodity exchange National Commodity & Derivatives Exchange Limited (NCDEX), which is the market leader in agri-commodity trading has initiated preliminary discussions with merchant bankers to raise funds via an initial public offer, sources told Moneycontrol.
"NCDEX is in talks with SBI Capital and ICICI Securities to raise around Rs 400 crore to Rs 500 crore via an IPO for growth capital and provide an exit window for their investors. The plan is to file a DRHP by end 2019," a source said.
Multi Commodity Exchange (MCX) which deals mainly in metals and energy is currently the only listed commodity bourse in India.
According to the NCDEX website, NSE is the largest shareholder in the exchange with a 15 percent stake, followed by LIC (11.10 percent), National Bank For Agriculture & Rural Development (NABARD, 11.10 percent), Indian Farmers Fertiliser Cooperative Limited (IFFCO, 10 percent), Oman India Joint Investment Fund (10 percent), Punjab National Bank (7.29 percent), Canara Bank (6 percent), IDFC Private Equity Fund (5 percent) and others.
"With rising volumes, the exchange wants to increase the percentage of the settlement fund. It also wants to expand and diversify into more commodities like its global peers. This is likely to be a mixture of primary and secondary issue of shares," added another source.
As of March 31, 2018, NCDEX offered trading in 27 commodity contracts, which includes 25 agricultural commodity contracts, 1 bullion commodity contract and 1 metal commodity contract. The website claims the exchange which was founded in 2003 is the leading exchange for agricultural commodities with an 85 percent market share.
"NCDEX has a diversified set of many shareholders including large national institutions, public sector banks and private equity funds. Depending on their investment strategy, some investors may seek a complete or partial exit via this IPO and some new investors may continue on board. Some others may choose to dilute their stake pre-IPO," added a third source.
According to the 2017-2018 annual report of NCDEX, the highest turnover achieved in a day, during the financial year 2017-2018 was Rs 4,956 crore.
Guar seed contributed to 22 percent of the total annual turnover of the exchange.
Other major contributors to the turnover were chana, mustard, castor and jeera. The average daily traded value for FY2017-18 stood at Rs 2,377 crore vis-a-vis Rs 2,296 crore for FY2016-2017.
National Multi-Commodity Exchange and Indian Commodity Exchange are the other key peers of NCDEX in the commodities segment.ICICI Securities declined to comment in response to a query from Moneycontrol. Moneycontrol is awaiting email responses from NCDEX & SBI Capital and will update this article as soon as it hears from them.