NSE to Buy 5% of Renuka Sugars Stake in NCDEX
Transaction, at around .` 175 per share, values bourse at .` 887 crore
RRAM SAHGAL & SNEHA SHAH
MUMBAI enuka Sugars, which holds 11.38% in NCDEX, is selling 5% to National Stock Exchange (NSE), an existing shareholder that owns 10% in the country’s largest farm futures bourse. The sale, according to two persons aware of the development, would take place at around .` 175 a share and values the bourse at .` 887 crore. It would be at a premium of .` 30 per share to the price Renuka paid to Crisil in 2010 when it purchased 7% in NCDEX from the rating agency, one of them said. That purchase valued the bourse at Rs 540 crore. A Renuka Sugars’ official was unavailable for comment. A call to Narendra Murkumbi, MD, Renuka Sugars, was diverted. Calls to an NSE official remained unanswered at the time of going to press. ET reported in its edition of April 26 about the likelihood of Renuka selling a large tranche of its shares in NCDEX to NSE. With the sale, the stake of NSE, perceived to be the dominant shareholder of NCDEX, will rise to 15% again. In 2010, NSE was forced to pare its stake from 15% to 10% after commodity market regulator FMC amended shareholding norms for commexes, restricting a stock exchange’s holding to 5%. While NSE managed to pare 5%, it could not sell a further 5% and its voting rights were capped. However, with FMC having revised commex shareholding norms recently, a stock exchange can again hold up to 15% in a commex. FMC has done away with the anchor investor norm which allowed a single investor to hold as much as 26% in a commex after the NSEL scam. Now, the shareholding of a single investor – excluding stock and commodity bourses, banks, insurance companies, depositories and public finance companies, each of which can hold up to 15% – has been capped at 5%. The new norms mean that Renuka Sugars will have to cut its shareholding to 5% from the existing 11.38%. Of NCDEX’s shareholders including LIC (11.1%), Nabard (11.1%), Iffco (10%), Oman India Joint Investment Fund (10%), NSE has been the dominant one in terms of sharing business and process knowledge and even setting strategy for the commodity bourse. This, said the persons cited earlier, was because of NSE’s ambition to straddle across asset classes like equity, currency, bonds and commodities. Asia’s oldest stock exchange, BSE, has bid for part of MCX promoter Financial Technologies’ share in the commex as it too has ambitions similar to NSE. Of the total commodity futures turnover of Rs 101 lakh crore in FY14, NCDEX’s market share was approximately 10%, way behind that of MCX which had around 85% market share.
The stake of NSE, perceived to be the dominant shareholder of NCDEX, will go up to 15% again