Home / Market / Stock-market-news /  FTIL exits MCX-SX via share, warrant sale deal

Mumbai: Financial Technologies (India) Ltd (FTIL) has sold its holding in MCX Stock Exchange Ltd (MCX-SX), completing its exit from all its exchanges in the country.

FTIL has entered into a share and warrant purchase agreement with investor Rakesh Jhunjhunwala and a separate agreement with a clutch of investors including Edelweiss Financial Services Ltd, the company said in a statement late on Tuesday.

A total of 2,70,00,000 equity shares and 56,24,60,000 warrants were sold in the two deals for an aggregate consideration of 88.419 crore, added the statement. FTIL held a 5% stake directly in MCX-SX along with warrants.

“Post completion of the above said transaction, the company would have completely exited MCX-SX," FTIL said.

The sale is in line with regulatory orders. In December 2013, the Forward Markets Commission (FMC) declared FTIL and its promoter Jignesh Shah unfit to run a commodity exchange in the country, following a 5,574.34 crore fraud at the National Spot Exchange Ltd (NSEL). FTIL held a 99.99% stake in NSEL.

In March, the Securities and Exchange Board of India (Sebi) passed a similar order, asking FTIL and Shah to exit all stock exchanges and clearing corporations. In May, the power sector regulator asked FTIL to exit the Indian Energy Exchange (IEX).

This process of compliance with those orders is now complete.

On 20 July, Kotak Mahindra Bank Ltd bought a 15% stake in Multi Commodity Exchange of India Ltd (MCX) from FTIL for 459 crore. The remaining 11% stake held by FTIL in MCX has been sold via open market deals.

Following the MCX stake sale, on 5 November, FTIL sold a nearly 26% stake in IEX to a consortium of investors led by Chennai-based private equity firm TVS Capital Funds for around 577 crore.

FTIL has also sold its stakes in a number of its overseas exchange ventures since last December.

FTIL, which is fighting a number of cases in the Bombay high court as a fallout of the fraud at NSEL, has claimed that the forced divestments had cost it nearly 1,000 crore.

While the transaction marks the exit of FTIL from the stock exchange promoted by Jignesh Shah, it may have little bearing on the operations of the exchange, which has seen a dwindling of trading volumes and erosion of its net worth.

“This secondary transaction may only help them in removing the stigma that was attached to them due to FTIL which was promoted by Shah, but it will only take away 10% of the problems MCX-SX is facing today. As an exchange, MCX-SX needs money at the moment and for that they will need to rope in an anchor investor as soon as possible,"said Sudip Bandyopadhyay, managing director and chief executive officer of Destimoney Securities Pvt. Ltd.


Anirudh Laskar

Anirudh Laskar is a senior editor at Mint, with 17 years of experience. He has reported on significant corporate matters including large mergers and acquisitions, India's emerging e-commerce sector and regulatory issues in the financial services industry. Based out of Mint’s Mumbai bureau, Anirudh has worked with Business Standard and The Telegraph before joining Mint in 2009.
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