Financial Technologies to shortlist bidders for selling its 24% in MCX

Moneylife Digital Team 12 April 2014

Financial Technologies is shortlisting bidders for selling its 24% stake in Multi-Commodity Exchange-MCX, following directions from FMC

Jignesh Shah-led Financial Technologies (India) Ltd (FTIL) on Saturday said it received non-binding bids from nine top corporates for buying its 24% stake in Multi-Commodity Exchange (MCX). FITL said it would shortlist the bidders by 25th April for cutting its stake in the country's largest commodity exchange.

In a regulatory filing, FTIL said it is making all efforts to complete the proposed sale of its stake in MCX by 25th April and has called for a board meeting on that day to finalise the bidders.

Last month, commodities market regulator Forward Markets Commission (FMC) had warned MCX about reducing the stake of FTIL. “FMC will take action against MCX if they do not comply with the shareholding order by 30th April. FMC is likely to stop MCX from floating new contracts,” an official from FMC had said.

In its order of 17 December 2013, FMC declared FTIL and its chief Jignesh Shah as 'unfit' to run any exchange following the turmoil at NSEL.

The regulator said FTIL was not ‘fit and proper’ to hold more than 2% stake in MCX.

Following this, the MCX board also asked its promoter FTIL to divest shares in excess of 2%.

Jignesh Shah-promoted FTIL has to reduce its stake in MCX to 2% from the current 26% to comply with the regulatory norms following payment crisis of Rs5,600 crore in its unit National Spot Exchange Ltd (NSEL).

FTIL has appointed a committee to oversee its restructuring plan, which includes divesting its take in MCX. The panel had a meeting on Friday.

In a statement, FTIL said: “The restructuring committee received non-binding bids from nine prospective investors, which includes marquee Indian and global conglomerates.”

The committee has completed the process of shortlisting of the parties with whom FTIL’s appointed banker JM Financial will take the discussion forward, it said.

The shortlisted bidders have sought interaction with the MCX management and customary due diligence as a pre-condition for the sale.

The committee has decided to shortlist the bidders by April 25 and will recommend the same to the board of FTIL, after the due diligence request of bidders is completed by MCX, it added.

FTIL said it is making all efforts to “complete the proposed sale of its 24% equity stake in MCX by 25 April, 2014’’.

FTIL mentioned that it will write to the MCX board seeking its cooperation for management interaction with the shortlisted bidders and customary due diligence to enable the proposed sale within the defined timelines.

The company will also write to the FMC seeking its support and cooperation in the matter. It will update FMC periodically on the progress made in the stake sale process, it added.

Shah-led group as well as FTIL are grappling with multiple woes in the wake of the Rs5,600-crore payment crisis at the group unit NSEL.

FMC had ruled that FTIL and Shah were not ‘fit and proper’ to hold more than 2% stake in any commodity exchange. The order has been challenged in the court.

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