Commodity bourse plans Rs 660 crore public issue

Multi Commodity Exchange Ltd (MCX) — India’s biggest commodity exchange by turnover — appears to be lucky (3rd time) having missed listing twice in the past with plans to raise Rs 660 crore from its initial public offering (IPO) and has set a price band of Rs 860 to Rs 1,032 per share.

MCX is offering about 6.4 million shares in the IPO, which will open next Wednesday and close on February 24.

With this, MCX will become the first Indian bourse to list its shares on an exchange. As per the prospectus, MCX’s majority shareholder Financial Technologies India and investors including PSU-lenders State Bank of India and Bank of Baroda will sell part of their holdings in the IPO.

Experts in the merchant banking circles believe this issue has the potential to open up the IPO market that had almost dried up. Simply put, MCX IPO being the first one in CY2012 will be a key test of investor appetite as dozens of companies backed out IPOs last year after the benchmark Sensex plunged 25 per cent in the worst performance in Asia.

However, with the Sensex recovering nearly 20 per cent from the recent lows, companies are contemplating to rework on their fund raising plans. In this context, Ravi Kapoor,
Managing Director & Head of equity-capital markets at Citigroup, which is one of the three bookrunners for this share sale of MCX, said this issue has a potential of opening up the
IPO market.

“We would see more fund raising if the markets continue to perform the way they are and the flows continue to come in the way they are.”

 With this issuance (MCX) happening, he continued, this has a potential of opening the market.  “I would expect more new issuances should also get lined up. It takes time to prepare an IPO. I would imagine new IPOs or the other IPOs would be more backended, but there would be other formats of fund raising happening definitely, if the market continues to perform the way they are.”  Apart from Citigroup, Morgan Stanley and Edelweiss Capital are the bookrunners for MCX share sale. Though market perception is that MCX is a good IPO — with a robust business model, profitability track and potential for future — happening at the right time with an improved investor sentiment in the secondary market, but one is not sure that one good IPO by itself could enthuse others nor the rally in the market could sustain.

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