BackFTIL sells its Singapore unit to ICE for $150 million
FTIL say it will use the proceeds from the sale of Singapore Mercantile Exchange to repay foreign currency loans
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Mumbai: Embattled trading platform provider Financial Technologies (India) Ltd (FTIL) is selling its Singapore Mercantile Exchange (SMX) unit to Intercontinental Exchange Group Inc. (ICE) for $150 million.
Analysts had expected FTIL would shed some of its ownerships in exchanges to protect its core trading platforms business as the company faces regulatory scrutiny that has sent its shares down more than 80% this year.
It will use the proceeds to repay foreign currency loans, the company said in a statement.
“SMX didn’t add anything to their profit," said Ashish Chopra, an analyst at Motilal Oswal Securities in Mumbai.
“If, in a couple of years, their losses hadn’t come down they would have contemplated selling it, but it’s come before that scheduled period of time simply because of what’s happening on the domestic front with all the regulatory scrutiny," Chopra said.
FTIL has come under investigation by Indian regulators and police over suspected violations of rules on contract durations at the National Spot Exchange (NSEL), a commodities exchange it owns.
Although SMX was considered by analysts to be the most promising of the global bourses partly or wholly owned by FTIL, it has attracted limited volumes since starting operations in 2010.
FTIL does not provide a breakdown of earnings for its units.
SMX, which trades mainly precious metals and base metals, had an annual turnover of $71 billion and average daily volumes of over 8,200 contracts, according to its website, well below volumes in FTIL’s domestic exchanges.
For Atlanta-based ICE, the purchase of SMX marks its latest deal after last week completing the acquisition of NYSE Euronext, which also gives it control of Liffe, Europe’s No.2 derivatives market.
FTIL shares rose 3% as of 10:54am, adding to a 20% gain on Monday and outperforming a 0.2% gain in the broader market. Reuters
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