Multi Commodity Exchange of India is all set to raise Rs 700-750 crore from the capital market with its proposed initial public offering. Six institutions will cumulatively offer 12.60 per cent stake for sale through the IPO, which is yet to be cleared by the market regulator SEBI.
“The MCX IPO should be priced at about Rs 1,200 a share given the fact that the last private placement of MCX shares with a face value of Rs 5 was done at Rs 620 a share. Now, the exchange is offering shares with a face value of Rs 10 through the IPO,” said an analyst.
Financial Technologies will offload 5.18 per cent, State Bank of India 4.14 per cent, Corporation Bank 0.48 per cent, GLG Financials 1.53 per cent, Bank of Baroda 0.21 per cent, Alexandra Mauritius 0.77 per cent and ICICI Lombard 0.29 per cent.
The lead promoter Financial Technologies has to reduce its stake to 26 per cent from 31 per cent before September to meet the regulatory guidelines. The exchange had twice in 2006 and 2008 got permission from SEBI for launching an IPO but had to desist due to unfavourable market conditions.
Crisil rating
Rating agency Crisil recently assigned five-on-five rating to the proposed IPO. This grade indicates that the fundamentals of the IPO are strong relative to other listed equity securities. However, this grade is neither an opinion on whether the issue price is appropriate in relation to the issue fundamentals, Crisil said.
The grade reflects MCX's leadership position in the Indian commodity futures market over the past four years, with a share of 82 per cent of the overall traded turnover in FY'10, it said. While new commodity exchanges have been set up over the past couple of years, they have not been able to nudge MCX from the top. However, given the high profitability and cash-churning nature of the business, Crisil expects competition to intensify in the future.
MCX earnings before interest, tax, depreciation and amortisation (EBITDA) margin and adjusted profit margin were 57.5 per cent and 37.2 per cent, respectively in last fiscal. The company has sufficient cash balance (21 per cent of the FY10 balance sheet) to fund its future requirements, it said.