Financial Technologies, which has been declared not ‘fit and proper’ to own a stake in commodity exchanges, plans to divest its holding in Multi Commodity Exchange by April 25. The company has called for a board meeting to decide on bidders that have shown interest in buying 24 per cent of the 26 per cent stake it holds in MCX.
The company’s restructuring committee, at a meeting on Friday, considered the non-binding bids of nine conglomerates listed by JM Financial, which is assisting in the stake sale.
All the short-listed bidders have requested for management interaction with MCX and customary due diligence as a pre-condition to the sale, said Financial Technologies, in a statement. The committee will zero-in on the final bidder by April 25 and recommend the same to the board.
Upset over the prolonged inaction in abiding by its order, commodity market regulator Forward Markets Commission had warned MCX that it will not approve the launch of a new contract on its platform if MCX’s promoter — Financial Technologies — failed to reduce its stake from 26 per cent to two per cent. Under intense pressure, the MCX board amended the Articles of Association to transfer the promoter’s stake to an escrow account and auction it at later stage, if need be.
It was forced to drop a proposal on preferential issue after institutional investors feared erosion of value. Interestingly, both these proposals, which need 75 per cent shareholder approval, will not pass muster without the support of Financial Technologies.
Seeking MCX and FMC support, Financial Technologies said it is making all efforts to complete the stake sale by April 25.
Open offerThe possibility of Financial Technologies stake sale triggering an open offer remains uncertain. According to SEBI regulations, any change in management calls for an open offer to minority shareholders. In the MCX case, SEBI has already denied voting rights for the 24 per cent held by Financial Technologies and this indicates a change in management.
The exchange is now operated by an independent board without representation of the promoter. With Financial Technologies now officially offloading its stake, it may trigger an open offer.