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Multi Commodity Exchange (MCX) shares on BSE hit a new 52-week low after Foreign Investment Promotion Board (FIPB) rejected its application seeking approval on allotment of shares to Mauritius-based trust Alexandra Mauritius (AML).
On BSE, MCX hit a new low of Rs 738 on Thursday, but recovered marginally to close with a loss of two per cent at Rs 742.
In 2008, AML bought 781,508 equity shares (around two per cent) at the face value of Rs 5 each from Financial Technologies, the promoter of MCX. In 2011, when the exchange came out with its initial public offering market regulator Sebi approved the issue with a condition that MCX should obtain FIPB approval for the Alexandra Mauritius deal. Following this diktat, MCX had applied to FIPB. This has now been rejected.
A government statement said FIPB, which met on June 14, rejected the proposal of the commodity exchange. MCX was seeking post facto (after the deal is executed) approval for FDI (foreign direct investment) received before the issuance of the guidelines for overseas investment in commodity exchanges.
When contacted the exchange spokesperson told Business Line that the application pertains to a foreign shareholder in MCX. They were supposed to furnish certain information, for a post facto approval and MCX was merely a facilitator for this approval, he said.
With the rejection of approval, it is up to AML to take a call on its further action. In its draft red herring prospectus filed in March, 2011, MCX listed Passport Capital LLC, Euronext NV, Aginyx Enterprises, Merrill Lynch Holdings (Mauritius), GLG Financial Fund, Intel Capital (Mauritius), New Vernon Private Equity, Alexandra Mauritius, IGSB-STAD I, LLC as foreign bodies holding stake in the exchange.
As of today, Financial Technologies hold 26 per cent while foreign bodies, listed along with promoters, hold 26 per cent stake in the exchange.
The levy of commodity transaction tax from July 1 has also hit the exchange hard with its volumes falling sharply in last few trading sessions.
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