The National Commodity & Derivatives Exchange Limited (NCDEX) – India’s premier exchange for agricultural commodity trading – has initiated ground work to launch its IPO. The company has initiated preliminary discussions with merchant bankers in this regard, reported Moneycontrol citing unnamed sources. The report added that draft prospectus for NCDEX Ltd IPO is likely to be submitted to SEBI by the end of the current calendar year.
NCDEX is in talks with SBI Capital and ICICI Securities to raise around INR400 crore (INR4 billion) to INR500 crore via an IPO for growth capital and provide an exit window for their investors. The plan is to file a DRHP by end 2019
NCDEX is following the footsteps of Multi Commodity Exchange (MCX) which got listed in 2012 and is currently the only commodity exchange listed in India.
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NCDEX Ltd IPO to offer exit route to investors
NCDEX has a long list of institutional investors and some of these will be looking for an exit route through the IPO. According to the information on its website, NSE is the largest shareholder in the exchange with a 15% stake, followed by LIC (11.10%), National Bank For Agriculture & Rural Development (NABARD, 11.10%), Indian Farmers Fertiliser Cooperative Limited (IFFCO, 10%), Oman India Joint Investment Fund (10%), Punjab National Bank (7.29%), Canara Bank (6%), IDFC Private Equity Fund (5%) and others.
NCDEX has a diversified set of many shareholders including large national institutions, public sector banks and private equity funds. Depending on their investment strategy, some investors may seek a complete or partial exit via this IPO and some new investors may continue on board. Some others may choose to dilute their stake pre-IPO
NCDEX – Leader in agri commodities
The exchange claims to have 85% market share in agricultural commodities in the country with 453 members and 2.65 million clients, according to its annual report for FY2018. Among its offerings are 25 agricultural commodity contracts, 1 bullion commodity contract and 1 metal commodity contract.
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During the financial year 2017-18, guar seed contracts contributed 22% of NCDEX’s annual turnover while other major contributors were chana, mustard, castor and jeera. The average daily traded value for FY2018 stood at INR2,377 crore, up 3.53% from INR2,296 crore in the previous year.
However, its consolidated revenues declined 1.57% to INR163.74 crore in the latest year. At the same time, the exchange posted a loss of INR13.90 crore compared to a profit of INR22.02 crore in FY2017.
Update: The exchange subsequently filed its draft prospectus in February 2020. Check the first look at NCDEX DRHP.