INDIA BUSINESS WORLD - DECEMBER 1^st - DECEMBER 15^th - 2007

ICICI, IL&FS, KOTAK BUY STAKES, GIVE MCX $1B TAG

Leading financial services groups ICICI, IL&FS and Kotak have bought a combined 9.55% stake in the country's largest commodity derivatives exchange, Multi Commodity Exchange of India (MCX). The transactions give MCX a valuation of over $1 billion.

ICICI Venture has picked up a 3.55% stake while IL&FS and Kotak have bought 5% and 1%, respectively. This will shrink the holding of Financial Technologies (FT)-MCX's main promoter-to 37.5%. The compelling valuation story in exchanges-as reflected by the institutional interest in bourses like NSE and BSE-has been the driver behind the investments. According to ICICI Bank CEO KV Kamath, it's the bank's "philosophy to partner with growth-oriented companies that seek to leverage technology and the power of markets for economic transformation".

Earlier this year, FT had sold 5% each to Citi and Merrill Lynch at similar valuations. The comex, incidentally, has already expressed its aim to list itself. "We are currently not looking at any further dilution of stake. The equity from the current stake sale will be deployed in improving the exchange infrastructure," said MCX MD and CEO Jignesh Shah.