This Article is From Apr 25, 2014

Financial Tech fails to finalise bidders to sell 24 per cent stake in MCX

Financial Tech fails to finalise bidders to sell 24 per cent stake in MCX

Crisis-hit Financial Technologies India Ltd (FTIL) was on Friday unable to finalise bidders for sale of its 24 per cent stake in Multi Commodity Exchange (MCX) as the potential buyers sought more time to submit binding offers on grounds that the bourse is not providing key information to them.

FTIL said they have also sought more time in view of MCX's board meeting on Saturday on a PwC audit report, conducted to examine if there was trade by related parties, including the promoter, FTIL, on the commodity bourse.

FTIL has called another board meeting on May 2 to review the stake sale in MCX.

The delay in stake sale means that MCX will miss the deadline of April 30 set by regulator FMC to ensure divestment of FTIL's stake to 2 per cent from the current 26 per cent.

FTIL has been declared not 'fit and proper' to hold more than 2 per cent stake in MCX by the FMC, following a Rs 5,500 crore payment crisis at its subsidiary NSEL.

Financial Tech also asked MCX to cooperate with bidders in providing critical information about the commodity exchange as some investors have complained to the Forward Markets Commission (FMC).

"Board today decided to reconvene on May 2 to review the divestment process of its 24 per cent holding in MCX. This is in light of the bidders seeking extension to put in their binding bids subsequent to MCX board tomorrow on April 26 for deciding the further course of action on the special audit report conducted by PwC," FTIL said in its statement.

FTIL has received non-binding bids from nine top corporates including Reliance Capital and Kotak Group for buying stake in MCX.

Meanwhile, Reliance Capital has written to commodity markets regulator FMC complaining lack of

cooperation by MCX and FTIL in providing critical information.

"...some of the serious bidders have communicated to the FMC and to FTIL appointed merchant banker - J M Financial Institutional Securities that there has been lack of cooperation by MCX in providing critical information, which is holding back any of these bidders to execute a binding share purchase agreement," FTIL said.

It said it has been transparent and has set up a standard procedure for all the bidders for the stake sale. It has disclosed information about MCX which is in the public domain.

"Any information beyond this has to be shared by MCX on which FTIL has sought cooperation from the company to enable the divestment be completed within the defined timeline of April 25, 2014," It said.

"Considering the concern raised by some of the potential investors, FTIL expects MCX to share the information sought by these investors to complete the divestment as early as possible."

FTIL also sought the draft report of a special audit conducted by FMC-appointed PricewaterhouseCoopers (PwC) so that company can share its views on some of the purported allegations against FTIL that can be aptly clarified.

PwC conducted a special audit on MCX to examine if there was trade by related parties on the bourse.

"FTIL understands that PwC has conducted a special audit on MCX and has submitted a detailed report to MCX and FMC," the company said.

"Neither MCX nor PwC has shared the report or sought views from FTIL."

Financial Technologies said all transactions between MCX and FTIL have been clearly disclosed in MCX's statutory audit conducted by leading auditors for the past 10 years.

"Also, all transaction between the two companies was clearly based on commercial agreements which were disclosed in detail in MCX's final red herring prospectus which was filed in 2012, based on which the market regulator allowed MCX's IPO in March 2012," it said.