Paul Parambi said the bank is a ‘pure financial investor’ in MCX and denied the deal had any thing to do with Kotak’s own venture Commex ACE

MUMBAI : Kotak Mahindra Bank Ltd said its investment in the beleaguered Multi Commodity Exchange of India Ltd is strategic and purely financial and it will have no special rights vis-a-vis management or seats on the board of directors.

Late on Sunday evening, Kotak Mahindra Bank announced that it has entered into a share purchase agreement to acquire a 15% stake in MCX from Financial Technologies (India) Ltd for 4.59 bln rupees (Rs 459 crore). Financial Technologies India Ltd (FTIL) originally held a 26% stake in commodity exchange MCX.

The bank will also not get involved in the operations of the bourse, Paul Parambi, head of group strategy at Kotak Mahindra Bank, told reporters. Justifying the investment in a company which has been hit by a major scam in one of its subsidiaries, Parambi said that once the regulatory restrictions on commodities futures are relaxed, the business will grow significantly and create value for all investors in the long term.

“As regulatory conditions evolve, as options trade are permitted, as newer classes of investors and commodity are allowed in the country…there can be significant upside for MCX,” said

“It is a value creating transaction for our stakeholders over the long-term,” he said.

Refusing to divulge details on the agreement, Parambi said the bank is a “pure financial investor” in MCX. He denied the deal had any thing to do with Kotak Mahindra’s own venture Commex ACE.

When pointed out that Financial Technologies has issues to deal with, Parambi said at this stage the bank is trying to focus on trying to meet all the conditions for the deal to be completed.

Shares of Multi Commodity Exchange of India settled nearly 8% higher at Rs 848.35 after rising 13.83 per cent to Rs 895 — its 52-week high at the BSE in intra-day trade. FTIL’s scrip climbed 2.11 per cent to close at Rs 273 on the BSE.

FTIL is divesting its 26 per cent stake in MCX after market regulator FMC had declared FTIL unfit to run any exchange in the wake of Rs 5,600 crore payment crisis at group company National Spot Exchange Ltd (NSEL).        -Cogencis/PTI

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