Mumbai Investments

May 23, 2011 James Heinsman Hedge Fund News

Mumbai government-owned Oman Investment Fund is working on an agreement to purchase part of stake owned by National Stock Exchange. Together with hedge fund NSE, the OIF will soon be part-owners of the National Commodity & Derivatives Exchange (NCDEX). According to a report, this deal will “value the bourse at Rs 700 crore.” The split will be OIF – 5 percent and NSE, 1.1 percent. Each share is priced at just under Rs 145.

Great Deal for India

Should this deal actualize, it will “mark the entry of a sovereign fund into India’s seven-year-old commodity futures market that posted turnover in excess of Rs 100 lakh crore in the previous financial year (FY11).” For face value, shares that have been subscribed to by NCDEX’s shareholders amount to 5.06 crore of Rs 10. “The valuation of Rs 700 crore is based on a share price around Rs 140, valuing the 6.1% stake at Rs 43 crore, or close to 10 times what NSE had invested in NCDEX to buy 15% stake at its inception in 2003.”

NCDEX Doing Well

For NCDEX this is good news too, especially when it comes to its shareholders. They will be given the opportunity to buy the shares that are NSE is selling should they be willing to “match the price the third parties have agreed to pay.” But the offer isn’t open-ending. They have to make a decision by tomorrow. If they do not decide by then, NCDEX “will approve the stake sale to the third parties at a board meeting on May 30, added the person quoted earlier.”

Shareholders of NCDEX

NCDEX has many shareholders. These include: Jaypee Capital Services, based in Delhi. They have a stake of 22.4 percent. Next is Renuka Sugars with an ownership of 12.5 percent. At 11.1 percent is LIC, Nabard and NSE and then much lower down the scale come Goldman Sachs and InterContinental Exchange, with a mere 2.96 percent each. According to speculation, it seems that it is most likely for Jaypee Capital and Renuka Sugars to be exercising their right of first refusal (RoFR).

Goldman Sachs, InterContinental Exchange, Jaypee Capital Services, LIC, Mumbai,

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