"Seven of the existing investors in the MCX are diluting part of their stakes. This means, the exchange will not get any money from the IPO," Rutten said, adding that the exchange is cash rich and does not require fresh capital.
India's largest commodity bourse MCX will hit the capital market today with an estimated Rs 663 crore initial public offer (IPO), pursuant to with it would become the country's first ever exchange to get listed. The bidding for shares in the IPO -- the first in the year 2012 -- will open tomorrow and close on February 24, MCX Managing Director and CEO Lemon Rutten told journalists. The price band of the IPO has been fixed in the range of Rs 860 to Rs 1032 per share, with a face value of Rs 10 each. Based on the upper end of the price band, the IPO could raise up to Rs 663 crore. Pursuant to the IPO, MCX shares would be listed on the BSE.
Investment banking sources said that shares are getting huge over-subscription of over 50 times from the anchor investors, the book-building for whom ended last night. The anchor investors, which are generally qualified institutional shareholders, are allotted shares a day before the bidding opens for public investors. Sources said that the demand is robust for the shares, as gauged from the huge premium being commanded by them in the grey market. The IPO has also received favourable comments from various brokerage firms and equity research entities. Recommending its clients to subscribe to the IPO, HSBC Invest Direct said MCX is likely to be able to sustain its profitability going forward due to slower growth in operating costs, in comparison to its revenue growth. It has termed the IPO as attractive valued.
CLSA has also said that the IPO was reasonably priced at upper band and it was a profitable franchise. Unlike other stock exchanges, MCX operates vertically integrated model, is profitable and generates positive cash flow besides debt free, CLSA noted. Domestic brokerage firm Enam Direct has said that regulatory reforms in the form of granting permission for trading in options and indices and approval to foreign as well as domestic institutions and banks to participate in commodity futures trading can be the next big trigger for growth in exchange volumes. This would consequently have a positive impact on the profitability of exchanges like MCX, it noted. The offer would comprise of sale of about 64, 27,378 equity shares, accounting for a 12.6 per cent stake in MCX. This would include 2,50,000 shares reserved for employees At least 50 per cent of net offer will be allotted to qualified institutional buyers, not less than 15 per cent to non-institutional bidders and not less than 35 per cent to retail individual bidders.
"Seven of the existing investors in the MCX are diluting part of their stakes. This means, the exchange will not get any money from the IPO," Rutten said, adding that the exchange is cash rich and does not require fresh capital. Financial Technologies (India) Ltd, State Bank of India, Bank of Baroda, GLF Financials Fund, Alexandra Mauritius Ltd, Corporation Bank and ICICI Lombard General Insurance Company are seven investors who will be divesting part of their holdings in MCX, he said.
Edelweiss Financial Services, Citigroup Global Markets India Private Ltd and Morgan Stanley India are the booking running lead managers of the share sale. The promoters FTIL currently hold 31.2 per cent stake in MCX, which would come down to about 26 per cent after the IPO. Rating agency CRISIL assigned a grade 5/5 to the IPO, indicating strong fundamentals. MCX, the largest commodity bourse in the country, has more than 70 per cent share in the annual estimated turnover of Rs 177 lakh crore for the entire commodity derivatives market. Globally, MCX is the fifth largest commodity exchange, while it figures among the top two positions in gold and silver segments. It would be the first exchange in India to go public, putting the country at par with other markets like the US, UK, Japan, Australia and Hong Kong.
