INDIA BUSINESS WORLD SEPTEMBER (16^th - 30^th) 2007
The Month that was ...

MERILL LYNCH AND CITIGROUP PICK 5% STAKE EACH IN MULTI COMMODITY EXCHANGE (MCX)

MERRILL Lynch and Citigroup have picked up 5% stake each in Multi Commodity Exchange (MCX), the country's largest commodity exchange. The transaction puts the total valuation of MCX at over $1 billion.

According to a communique to Bombay Stock Exchange, Financial Technologies (FTIL), the majority stakeholder in MCX, has sold the stake. While Merrill has paid $50 million, the deal with Citi has been at a slightly higher price, said sources.

FTIL has also entered into agreements to offload 3% and 2% to two foreign funds - Passport India Investment (Mauritius) and GLG Financials Fund. With the sale, FTIL's shareholding in MCX will shrink to 49%.

"These investments from strategic international partners will provide Indian commodity markets and MCX access to global knowhow, best practices, domain knowledge and technology," said the FTIL statement to the stock exchange.

"The transactions have been done with the prior approval of the Forward Markets Commission," said MCX deputy MD Joseph Massey. A total 49% foreign holding - 26% FDI and 23% FII -similar to stock exchanges, has been proposed for commodity exchanges.

With the completion of all the announced transactions, foreign holding in MCX will be 24%. US fund Fidelity International aclready owns 9% in the MCX. Fidelity International had picked up the stake through its associate company FID Fund (Mauritius) for $49 mn in February '06.

Goldman Sachs had acquired 7% stake in National Commodities and Derivatives Exchange, the other commodity exchange.