India-based sugar producer and exporter, Shree Renuka Sugars, has announced it will sell a 5% stake in National Commodities and Derivatives Exchange (NCDEX) to The National Stock Exchange of India (NSE).
The deal means the NSE will have a 15% stake in NCDEX – the maximum allowed under new guidelines drawn up by India’s Forwards Markets Commission (FMC).
According to sources, Renuka Sugars will sell an additional 2.5% stake to a warehousing firm, though the buyer has not been announced. The entire 7.5% stake to be sold by Renuka Sugars represents approximately 38 million equity shares of NCDEX valued at Rs 665m ($11m), and Renuka Sugars will now hold a stake of about 5% in NCDEX, down from 11.4%.
In March, Renuka sold 1.1% of its holding in the exchange to the existing shareholder, Indian Farmers Fertiliser Cooperative. In February, Singapore-based agricultural business Wilmar bought a $200m controlling stake in Renuka Sugars.
This acquisition turned Renuka Sugars into a foreign entity and under the new FMC regulations no foreign entity can hold more than a 5% stake in a commodity exchange. The total deal size is anywhere between Rs 9m ($150,000) and Rs 10m ($166,000). They originally invested around Rs 7m (£116,000) in NCDEX.