Kotak Mahindra Bank believes in long-term franchise of MCX: Paul Parambi 21/07/2014

Kotak Mahindra Bank believes in long-term franchise of MCX: Paul Parambi
21/07/2014 13:09
Kotak Mahindra Bank, which has decided to buy a 15 per cent stake in commodity bourse Multi Commodity Exchange from Financial Technologies Ltd (FTIL), today said it would be a long term investor in MCX and the deal will create value for the bank's shareholders. "The franchise (MCX) is great. As of now, we are coming in as a financial investor. We believe in long-term franchise of MCX and we will take it along as it goes," Bank's Head, Group Strategy, Paul Parambi told reporters. The bank yesterday said it has entered into a Share Purchase Agreement (SPA) to purchase 15 per cent equity stake in MCX from FTIL for a consideration of Rs 459 crore. The deal will require necessary regulatory approvals. The bank has agreed to buy MCX shares at Rs 600 apiece, he said. Parambi said the bank, for long, was looking for an investment in financial infrastructure space and this was the right opportunity for it. "We believe that this is a value creating transaction for our shareholders for a longer period of time. And we are very excited about this transaction," he said. "We are not looking at any special rights or board seat," he added. He further said over a period of time as regulatory conditions evolve, as option trading is permitted, as newer classes of investors are permitted into the country and into the commodities market and as restriction on certain commodities are removed, there can be a significant upside for MCX in terms of its business from current levels. Last week, FTIL had offloaded four per cent stake in MCX through open market route for about Rs 154 crore, bringing down its shareholding to 20 per cent.