MCX files DRHP with Sebi for IPO
Moneylife Digital Team 01 April 2011

Under sectoral regulator FMC norms, the anchor investor, Financial Technologies is required to reduce its stake to 26% from the present 31.18%, which it has declared to achieve through the IPO. MCX also announced that it will be appointing a former High Court Judge as an Exchange Ombudsman and declared that it favours bringing exchanges under the purview of the Right to Information Act

Leading commodity exchange Multi Commodity Exchange (MCX) has announced its intention to go public through an initial public offering (IPO) which will see its existing shareholders diluting
12.60% of equity.

The offer for sale from the existing shareholders, including promoter Financial Technologies (FT) led by Jignesh Shah, is through a 100% book-building process.

MCX filed its draft red herring prospectus (DRHP) with capital markets regulator SEBI (the Securities and Exchange Board of India) on Thursday (31st March).

Under sectoral regulator FMC (Forward Markets Commission) norms, the anchor investor-FT-is required to reduce its stake to 26% from the present 31.18%, which it has declared to achieve through the IPO.

On 14th May, Moneylife had reported on how FMC had given a nod to the MCX IPO. (http://www.moneylife.in/article/8/5395.html).

Lamon Rutten, managing director and CEO of the Exchange, said that he hopes to complete the process by the deadline (30th September), failing which FT will have to find "other ways" of diluting the equity to meet the deadline. He, however, did not reveal the quantum of money to be raised through the IPO.

Interestingly, the National Stock Exchange (NSE), one of the stakeholders in MCX, will not be diluting its stake.

"SEBI generally takes 45 days to clear DRHPs and then we have a year's window to list which we will choose as per market conditions," Mr Rutten said.
NSE is not among the institutions diluting stake through the IPO either, he said, adding the issue will see SBI, Corporation Bank, GLG Financials Fund, Bank of Baroda, Alexandra Mauritius and ICICI Lombard General Insurance bringing down their stakes to 1.04%, 3%, 0.38%, 0.82%, 0.19% and 0.07%, respectively.

When asked if the financial institutions holding stakes are looking at the IPO as a good platform to exit and make money on their long-held investments, Mr Rutten parried the question, reports PTI.

He said the IPO is for bringing in the highest levels of transparency by ensuring shareholder and public scrutiny and corporate governance practises.

Edelweiss Capital, Citigroup Global Markets and Morgan Stanley will be acting as book running lead managers to the IPO which has caps of 50% for qualified institutional buyers and minimum limits of 15% for non-institutional bidders and 35% for retail buyers.

MCX also announced that it will be appointing a former High Court Judge as an Exchange Ombudsman and declared that it favours bringing exchanges under the purview of the Right to Information Act.

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