NCDEX files DRHP for Rs 500 crore IPO; third bourse to hit D-Street

Life Insurance Corporation of India (LIC) and National Stock Exchange (NSE)-backed multi-commodity exchange National Commodity & Derivatives Exchange Limited (NCDEX) has filed a draft red herring prospectus with market regulator SEBI for an initial public offer.

The exchange is looking to raise Rs 500 crore through the IPO and filed the DRHP on February 11, two sources with knowledge of the matter said.

Moneycontrol was first to report the agri-commodity trading leader’s listing plans on May 17, 2019. This will be the third listing by a universal bourse in India after Multi Commodity Exchange (MCX) and BSE.

"The DRHP has been filed today [February 11] for raising growth capital to diversify into more commodities like its global peers and also to provide an exit window for multiple investors. This will be a mixture of primary and secondary issue of shares,” a source told Moneycontrol.

“SBI Capital and ICICI Securities are the merchant bankers working on the IPO. The launch is likely in May 2020,” another source added.

According to the NCDEX website, NSE is the largest shareholder in the exchange with 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) among others.

As of March 31, 2018, NCDEX offered trading in 27 commodity contracts, which included 25 agricultural, 1 bullion commodity contract and 1 metal. The website claims, the exchange was founded in 2003 and is leading in agricultural commodities with 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," a third source said.

According to the 2017-18 annual report of NCDEX, the highest turnover achieved in a day, during the financial year 2017-18 was Rs 4,956 crore. Guar seed contributed to 22 percent of the total annual turnover for the exchange.

Other major contributors to the turnover were chana, mustard, castor and jeera. The average daily traded value for FY17-18 stood at Rs 2,377 crore vis-a-vis Rs 2,296 crore for FY16-2017. NCDEX, ICICI Securities and SBI Capital were unavailable for an immediate response.