MCX close to selling 18 crore warrants, premium wiped out

Suresh P Iyengar Mumbai | Updated on January 24, 2018 Published on June 12, 2015

Converted into shares, the firm’s stake in Metropolitan SE will be around 10%

Multi Commodity Exchange is close to striking a deal to offload about 18 crore warrants it holds in Metropolitan Stock Exchange of India (formerly MCX Stock Exchange) for an undisclosed amount.

June 19 deadline

Though the commodity exchange holds 58.26 crore warrants, it has initiated a bidding process to offload only 40 crore warrants. If unsold, these warrants will expire on June 19 as it exceeds the three-year validity provided at the time of allotment.

The exchange did not respond to an email sent on this development.

15% holding issue

The offer to sell 18 crore warrants is considered Plan-B as MCX is still hopeful of getting SEBI approval to retain it, said sources. These warrants, when converted into shares, works out to about 10 per cent holding in the stock exchange and along with its current stake of 4.14 per cent, MCX is well within its rights to hold up to 15 per cent, it added.

The Union Budget has made provision to merge Forward Contracts Regulation Act with Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, which provides deemed stock exchange status for MCX.

Little room for premium

“The Securities Regulations allow deemed stock exchanges to hold up to 15 per cent in other stock exchanges. Since MCX is a listed entity, SEBI should also consider investor interest,” said Praveen Gupta, an MCX investor.

The stock has fallen 12 per cent to ₹956 in the last two weeks.

In March, MCX sold 3.05 crore warrants of the stock exchange for ₹2.50 each (premium of ₹1.50 a warrant) to Infrastructure Leasing and Finance Services raking in ₹7.63 crore. Post the IL&FS deal, MCX holds 58.26 crore warrants valued at ₹117.91 crore and 4.10 per cent equity stake in MCX Stock Exchange.

However, the ongoing rights issue of Metropolitan Stock Exchange of India will reduce the ability of MCX to charge a premium for the warrants now. Metropolitan Stock Exchange had announced a rights issue in the ratio of 1:1 to mop up about ₹118 crore.

The rights issue closes on July 8.

Published on June 12, 2015
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