Rakesh Jhunjhunwala offloads majority stake in MCX

PALAK SHAH Mumbai | Updated on October 16, 2021

Rakesh Jhunjhunwala   -  REUTERS / SHAILESH ANDRADE

Move follows the ace investor’s close aide resigning from the bourse’s board

Leading stock market investor Rakesh Jhunjhunwala has sold his entire 4.9 per cent stake in Multi Commodity Exchange (MCX), sources told Business Line. The stake sale was done closely after Jhunjhunwala's close aide Amit Goela resigned from the MCX board sometime between June and August this year. Two of Jhunjhunwala's trusted aides Goela and Madhu Jayakumar were appointed on the MCX board in 2015 shortly after the ace investor picked up a major stake in the exchange. Jayakumar has quit MCX in 2020.

Jhunjhunwala held 25 lakh shares of MCX as on quarter ended June 2021, the BSE filings of MCX show. But his name does not figure among the top public shareholders of MCX as per the September quarter filings. As per the norms, every company has to make the names of shareholders, having more than 1 per cent stake, public. Jhunjhunwala offloaded a large chunk of his holding in the open market in the price range of ₹ 1,480 to₹1,846 per share. This was the high and low price of MCX shares between July and September. MCX share price closed at ₹ 2067 on the BSE on Friday. The exchange has a price to earnings (PE) ratio of 61 and could be among the most richly valued exchanges in the world in terms of PE. It enjoys a market-cap of ₹ 10,543 crore as on Friday's closing price. Some of the other leading high net worth individuals, who closely follow Jhunjhunwala in investment strategy too have offloaded their MCX stake, sources said.

Jhunjhunwala had first purchased around 10 lakh shares or nearly 2 per cent stake in MCX in July 2014 for ₹ 664 per share. Thereafter, he kept on hiking his holding in the exchange. He entered MCX after buying a part stake of Financial Technologies that was forced to divest its holdings post the NSEL fiasco. Kotak group is currently the largest shareholder in MCX having 15 per cent stake. Among the domestic portfolio managers, Parag Parikh Financial Advisory Services owns a 4.98 per cent stake or little over 25 lakh shares of MCX. India's exchange space is likely to be in focus in the coming months in anticipation of the NSE IPO. MCX was recently included in the derivatives segment, which makes buying and selling of large quantities easy. Shares traded outside the derivatives segment attract circuit filters.

Fall in trading volumes

Trading volumes on MCX have witnessed a sharp fall and in some segments are near their lowest in a decade. For the past few years now, MCX has been earning a major chunk of its profit from the cash float it owns while its operating profits have not seen any major jump. Also, the exchange has been embroiled in many controversies involving data theft, land and software purchases. MCX currently is in the midst of changing its entire trading technology, which will be a test case for Indian exchanges, experts said.

Published on October 16, 2021

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