Citigroup and Merrill Lynch have bought 5 percent stakes in India's top commodities exchange, valuing it at up to $1.1 billion, or more than the Bombay Stock Exchange which sold stakes earlier this year.
Financial Technologies India Ltd, which controls the Multi Commodity Exchange, or MCX, said on Friday it was also selling a 3 percent stake in MCX to Passport India Investment (Mauritius) Ltd and another 2 percent to GLG Financials Fund.
Exchanges around the world have been benefiting from strong growth in trading volumes, fuelled by bullish markets and a host of new products. A wave of takeovers, mergers and stake sales has also swept the industry as operators seek global reach and greater economies of scale.
Analysts said the stake sales signaled foreign institutions were upbeat about growth in Indian commodity markets, which could grow rapidly if the government allowed banks and mutual funds to trade in the markets.
By taking a stake in the exchange, they are exhibiting confidence on the growth of the domestic commodity markets. They are expecting volumes to grow at the exchanges, said Rajni Panicker, an analyst with MF Global.
The transactions valued MCX at $1 billion to $1.1 billion, the statement said. At that level, total proceeds from the deals would be $150 million to $165 million.
These investments from strategic international partners will provide Indian commodity markets and MCX access to global know-how, best practices, domain knowledge and technology, it said in a statement.
MCX has a daily turnover of 100-120 billion rupees ($2.5-3 billion) and while rival NCDEX has a daily turnover of about $450-500 million. The two account for about 95 percent of trading volume in India, where futures trading in commodities began five years ago.
Goldman Sachs and Atlanta-based IntercontinentalExchange Inc hold stakes in NCDEX, and a spokeswoman for Financial Technologies said the company may consider selling stakes in its exchanges to other bourses if such opportunities arose.
In February, Germany's Deutsche Boerse bought a 5 percent stake in the Bombay Stock Exchange in a deal which valued the bourse at $910 million. Singapore Exchange bought a 5 percent stake in March.
That valuation was far below the $2.3 billion valuation of the National Stock Exchange, BSE's rival for about a decade, after it sold stakes to Goldman Sachs and NYSE Group Inc, now NYSE Euronext, and others.
MCX's deputy managing director, Joseph Massey, told Reuters that some of the proceeds would go towards the existing National Spot Exchange Ltd and National Bulk Handling Corp, both of which are controlled by Financial Technologies.
MCX has also announced plans to set up a power exchange.
The group has plans to set up exchanges and get into new ventures both here and abroad and we will be using the proceeds from the divestment in these ventures, Massey said.
He did not rule out selling more stakes in the exchanges promoted by the group, but did not provide further details.
Shares in Financial Tech rose 6.1 percent to 2,761.05 rupees in a Mumbai market that rose 0.8 percent.
(Additional reporting by Hari Ramachandran)