L&T Infotech eyeing stake in NCDEX

In yet another indicator of the growing interest of I.T majors in commodity exchanges , L&T Infotech, the I.T services arm of engineering conglomerate Larsen and Toubro is evaluating options for a possible stake buy in multi-commodity exchange NCDEX, two sources familiar with the development told ET NOW.

"L&T Infotech is examining documents relating to the performance of NCDEX. The exchange is valued at around Rs 1000 crore based on recent exits and under the current norms, L&T Infotech can pick up a maximum of 10% stake. A stake buy would boost the crucial BFSI ( banking,financial services and insurance) vertical of L&T Infotech, but these are early stages and it may or may not fructify in a deal", said one of the two sources mentioned above. Earlier on 9th January, ET NOW had reported on Tech Mahindra expressing interest in a potential buyout of crisis-hit Financial Technologies which is a rival to NCDEX.

In NCDEX, the maximum investor stake of 12.5% is held by Shree Renuka Sugars. Other shareholders include LIC, NSE, Nabard, Iffco, Punjab National Bank, Crisil, Intercontinental Exchange of the US , Canara Bank and Goldman Sachs investments. " If talks reach an advanced stage, one could potentially see stake dilution or multiple exits by the shareholders," said a person close to the transaction.

In response to a query from ET NOW, an L&T spokesperson said, "As a large business organization, portfolio review is a continuous process at L&T. We always examine new business opportunities and facilities. However, we comment on such developments only after a decision is arrived at, and do so in compliance with the regulations governing dissemination of such information." When contacted, an NCDEX spokesperson responded saying, "The exchange does not have any information in this regard."

According the annual report of FY12-13 for L&T subsidiary companies, the contribution to revenues from the services segment ( also includes media , entertainment , travel and logistics ) of L&T Infotech was 43%. The total trading volumes across all commodities for the month of December 2013 was recorded at Rs 104,550 crores according to the NCDEX.