Multi-Commodity Exchange (MCX), India's leading commodity marketplace, on Friday said that the United States-based NYSE Euronext will acquire a 5 per cent stake in the exchange for Rs 240 crore ($55 million).

MCX said that it has signed a binding term sheet to offer a 5 per cent equity position to NYSE Euronext.

The 5 per cent equity investment is the maximum equity interest permitted to foreign investors in derivative exchanges under current laws.

Last month, the government had allowed foreign companies, funds and exchanges to acquire up to 49 per cent of a commodity bourse, but with single holdings capped at 5 per cent.

The closing of the transaction is expected to take place during the first half of 2008, subject to all relevant regulatory approvals.

For NYSE Euronext, this will be its second foray into India after buying a five per cent stake in the National Stock Exchange and its first investment in a commodity exchange in the Asia-Pacific.

"The enterprise value of the exchange works out to $1.1 billion, and the funding will be deployed in development of the eco-system and growth of the Indian commodity market," MCX's managing director and chief executive officer Jignesh Shah said.

In addition to NYSE Euronext, other shareholders in MCX include: State Bank of India [Get Quote] and its associates; National Bank for Agriculture and Rural Development; National Stock Exchange; SBI Life Insurance Co; Bank of India; Bank of Baroda [Get Quote]; Union Bank of India [Get Quote]; Corporation Bank [Get Quote]; Canara Bank [Get Quote]; HDFC Bank [Get Quote]; Fid Fund (Mauritius); ICICI [Get Quote] Ventures; IL&FS; Kotak group; Citibank; Merrill Lynch; and Financial Technologies.

Currently, there are 14 corporate listings from India on NYSE Euronext markets, 12 on the New York Stock Exchange and two on Euronext, whose combined total global market capitalization exceeds $110 billion. -- PTI

Jignesh Shah, MD & CEO, MCX, and Catherine Kenney, President, NYSE Euronext in Mumbai on Friday.
Photograph: Arun Patil

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