NSE to Buy 5% of Renuka Sug­ars Stake in NCDEX

Trans­ac­tion, at around .` 175 per share, val­ues bourse at .` 887 crore

The Economic Times - - Markets & Finance -

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

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