India’s largest stock exchange, the National Stock Exchange (NSE), is in the final stages of acquiring the National Commodities and Derivatives Exchange (NCDEX) for an enterprise value of Rs 900-1,000 crore. .
The NSE, the original promoter of NCDEX, still has a 15 percent stake in the exchange as an anchor investor. Sources said Line of business The deal is expected to be completed in the next few months. A senior exchange official was seeking the position of deputy general manager at the NSE as part of the deal, the sources said.
NCDEX had obtained the go-ahead from market regulator SEBI to launch its initial public offering. The exchange aimed to raise Rs 500 million through the sale of shares. But this is likely to take a backseat due to merger talks with the NSE, the sources said.
Previously, NSE and MCX were exploring a merger, but did not move forward as SEBI believed that many regulatory hurdles could arise in the deal.
While the NSE has been scaling new heights in the stock trading business, NCDEX has been struggling. NCDEX’s consolidated profit last year was ₹ 8.46 crore.
In the commodities segment, the Commodity Exchange (MCX) gained monopoly status with its focus on trading bullion metals and crude oil derivatives. But NCDEX kept its focus on agricultural commodities. In July, NCDEX’s Average Daily Billing Value (ADTV) doubled to ₹ 2,151 crore compared to the same month last year. Last year, the ADTV was ₹ 785 crore. If the merger goes through, the NSE will once again compete with its former rival, the BSE, in the agricultural segment. The BSE runs e-Agricultural Markets Ltd, an electronic spot platform for agricultural products.
The NCDEX merger may also boost NSE’s valuations ahead of its IPO, analysts said.
With an 11% stake, LIC is NCDEX’s number 2 shareholder.
Other shareholders include National Bank for Agriculture and Rural Development, Indian Farmers Fertilizer Cooperative Limited, Oman India Joint Investment Fund, Punjab National Bank, Canara Bank, InvestCorp PE Fund I, Build India Capital, Shree Renuka Sugar, Jaypee Capital, all of which may obtain shares of NSE after the merger agreement.
Neither NSE nor NCDEX responded Line of businessqueries from.
“There is a belief within SEBI that the NSE has better regulatory compliance standards and deep pockets to revive the agricultural trade in India, something the incumbent government has been very interested in,” said one market expert.