MCX files IPO draft prospectus; may raise about Rs 500 cr

The country's leading commodity bourse, Multi Commodity Exchange of India, today filed a draft prospectus with the market regulator SEBI for its IPO, through which the company is estimated to raise about Rs 500 crore through sale of one crore equity shares.

Financial Technologies India, the parent company of the bourse, informed the stock exchanges today about the filing.

According to DRHP, the public issue of one crore equity shares of Rs five each at a premium to be determined through a 100 per cent book-building process would comprise fresh issue of 60 lakh shares and another 40 lakh shares to be sold by FTIL and Corporation Bank.

"The issue comprises a net issue of 90 lakh equity shares to the public, a reservation of up to 2.5 lakh equity shares for the existing FTIL shareholders, a reservation of up to five lakh equity shares for eligible employees and a reservation of up to 2.5 lakh equity shares for the business associates." The company had filed a Draft Red Herring Prospectus for its IPO way back in 2006, but the plans were later shelved.

The revival of IPO plan comes within a week of NYSE Euronext, which owns the New York Stock Exchange and four European bourses, announcing picking up five per cent stake in MCX for about Rs 218 crore (USD 55 million). The deal had valued MCX at about 1.1 billion dollars (over Rs 4,300 crore).

When asked whether bringing an IPO in the midst of a turbulent stock market conditions that have seen shelving of three IPOs mid-way their book-building process was a good idea, MCX's Deputy Managing Director Joseph Massey told PTI, "We have just filed the prospectus and it will take some more time (for IPO to start)... We cannot take a decision based on what has happened on some particular days."

Earlier this month, realty giant EmaarMGF, Wockhardt Hospital and SVEC Construction had to withdraw their IPOs citing weak investors' response. However, some other firms such as PSU power sector lender REC have decided to go ahead with their IPOs, while public offer by GSS America Infotech managed to complete with full subscription. REC IPO is scheduled to begin tomorrow. The MCX public issue would constitute 11.88 per cent of its post-issue paid-up equity capital, while the net issue would be of 10.7 per cent. The IPO proceeds would be used for the exchange's technology infrastructure and strategic investment and acquisitions, besides other usages.

MCX intends to use Rs 135.1 crore for expansion and enhancement of its technology infrastructure, about Rs 50 crore set up a commodity ecosystem infrastructure, Rs 100 crore in equity investment in a clearing corporation promoted by MCX and Rs 25 crore for "strategic investments and acquisitions." Besides, the IPO proceeds would be also used for general corporate purposes and IPO expenses.

The NYSE deal, expected to close by June, brings down the stake of FTIL, the main promoter of MCX, to about 32 per cent. This would further fall after the IPO.

Late last month, leading banking and financial services groups ICICI, Kotak and IL&FS had picked up 9.55 per cent stake in MCX. The ICICI Group had picked up a 3.5 per cent stake, while Kotak and IL&FS acquired five per cent and one per cent respectively. Merrill Lynch and Citigroup had also bought five per cent stake each last year.

Other shareholders are Fidelity, SBI and its 7 associate banks, SBI Life Insurance Co Ltd, HDFC Bank, NSE, NABARD, Canara Bank, Bank of India, Union Bank of India, Bank of Baroda and Corporation Bank. The turnover of MCX, which has a stronghold in bullion, metal and energy commodities, was Rs 27,29,822 crore during April-December 2007