FTIL to sell 15% stake in MCX to Kotak Bank for Rs 459 cr

Financial Technologies India LtdMumbai - Jignesh Shah-led Financial Technologies on Sunday said it has signed an agreement to sell 15 percent stake in MCX to Kotak Mahindra Bank for Rs 459 crore.

Financial Technologies India Ltd (FTIL) originally held a 26 percent stake in commodity exchange MCX.

Earlier this month, it sold 6 percent stake in MCX in two rounds for about Rs 220 crore, bringing down its shareholding to 20 percent.

After an agreement with Kotak Mahindra bank to sell 15 percent stake, FTIL is left with 5 percent stake in MCX.

FTIL is divesting its 26 percent stake in MCX? after market regulator FMC had declared FTIL unfit to run any exchange in the wake of Rs 5,600 crore payment crisis at group company National Spot Exchange Ltd (NSEL).

The regulator asked FTIL to reduce its stake in MCX to 2 percent from 26 percent.

"Subject to certain conditions to be fulfilled, including regulatory approvals prior to closing of the transaction, FTIL has entered into a Share Purchase Agreement (SPA) to sell 15 percent stake in MCX to Kotak Mahindra Bank Ltd (KMBL) for a total consideration of Rs 459 crore," FTIL said in a statement.

The company will continue with its divestment process to sell the balance 5 percent stake subject to the receipt of binding bids and all regulatory and other approvals.

FTIL said it had committed to divesting its holding in MCX.

This transaction culminates the majority of the divestment process initiated by FTIL since February 27, it added.

Commenting on the development, FTIL Non-Executive Chairman Venkat Chary, said, "We are happy that Kotak Mahindra Bank will become a significant minority shareholder in MCX and will contribute towards the next phase of growth of MCX as a responsible public shareholder.

"We are satisfied that we could divest to KMBL and wish both MCX and KMBL a great future. FTIL will continue to remain a technology partner to MCX and will work closely with MCX to take MCX to even greater heights."

FTIL had appointed a restructuring committee to oversee this process, which appointed JM Financials as its investment banker and Ican as advisor.

Despite many challenges since initiation of the divestment process, FTIL was successful in generating and negotiating a binding offer from one of India's largest private sector banks, KMBL, thereby endorsing the credentials of a strong world-class institution promoted by FTIL, the company said.

Meanwhile, Kotak Mahindra Bank also issued an statement announcing signing of an agreement to buy 15 percent stake, worth Rs 459 crore, in the Multi Commodity Exchange (MCX), India's largest commodity exchange, from Financial Technologies Ltd (FTIL).

The bank, however, said the deal would be subject to regulatory approvals.

Commenting on the development, Kotak Mahindra Bank Executive Vice Chairman and Managing Director Uday Kotak said, "We are excited by the potential presented by the financial infrastructure space in the country."

FTIL had promoted MCX in 2003 and it was the first exchange to be publicly listed. (PTI)