Citigroup Inc., Merrill Lynch & Co. and two other investors acquired stakes in the Multi Commodity Exchange of India Ltd. as trading surges in the Asian nation, the world's second-largest sugar and rice producer.
The U.S. investment banks acquired 5 percent stakes, Ravi Muthreja, a spokesman for the Mumbai-based company said today. Passport Capital acquired 3 percent and GLG Partners LP purchased 2 percent in MCX, as the exchange is known.
Goldman Sachs Group Inc. and Fidelity International Ltd. have invested in Indian markets as the fastest pace of economic growth since independence in 1947 spurs commodity demand. Overseas capital may help MCX, the world's third-largest gold exchange, develop products as the metal rises to near a record.
“The foreign companies will bring in their expertise from overseas and help enhance the Indian commodity market,'' Amol Tilak, an analyst at Kotak Commodity Services Ltd., said by phone from Mumbai. “It's a good time to be in.''
Rob Stewart, a Hong Kong-based spokesman for Merrill Lynch, the third-largest securities firm, declined to comment today. Madhulika Gupta, a spokeswoman for Citigroup, the largest U.S. bank, wasn't available.
Domestic traders and companies are the main participants on Indian commodity exchanges, compared with the 13 million individual investors — three times the population of Singapore — who invest in stocks. The South Asian nation opened up its stock markets to foreigners in 1993. MCX was inaugurated in November 2003, according to its Web site.
Globally Competitive
Jignesh Shah, managing director of MCX, said in January that overseas capital was essential for Indian commodity markets to become globally competitive.
Goldman acquired a 7 percent holding in the National Commodities & Derivatives Exchange Ltd. last year and Fidelity has bought 9 percent of MCX. Fidelity, a unit of Boston-based Fidelity Investments, the world's largest mutual-fund company, paid $49 million for its stake in MCX and Goldman paid $21 million for its holding.
MCX has tied up with Euronext.liffe, the New York Board of Trade, Bursa Malaysia Derivatives Bhd. and Shanghai Futures Exchange to pool product knowledge.
Goldman, the world's biggest securities firm, and NYSE Group in January led a group of investors buying a 20 percent stake in India's National Stock Exchange. Singapore Exchange Ltd. and Deutsche Boerse acquired a 5 percent each in the Bombay Stock Exchange Ltd., Asia's oldest.
Source: Bloomberg