National Multi Commodity Exchange (NMCE) will merge with Indian Commodity Exchange (ICEX), where Reliance Capital is the largest investor, in an all-stock deal to create the country's third-largest commodities bourse.
This is the first merger deal in the commodity exchange space and the merged entity will offer the world's first diamond futures contract along with a wide range of contracts, including bullion, oil, rubber and other agri-commodities.
Reliance Capital is the largest investor in ICEX and will continue to be the largest shareholder post merger, along with others.
As per the agreed swap ratio, ICEX shareholders will hold 62.8 per cent stake and NMCE's will hold 37.2 per cent in ICEX, post merger.
The merger has been approved by the boards of both exchanges and is expected to be completed by December 2017, subject to regulatory approvals.
"The merger will result in greater financial strength, consolidation of clients and members, enhanced product basket and higher operational synergies, helping ICEX further strengthen its position in the fast-growing commodity derivatives market in India," ICEX MD and CEO Sanjit Prasad said.
Shares of Reliance Capital were trading at Rs 655.5, up nearly 2 per cent, in morning trade on the BSE.
The merged entity will have prominent shareholders from both exchanges including MMTC, Indian Potash, Krishak Bharti Cooperative (Kribhco), IDFC Bank, Indiabulls Housing Finance, Reliance Capital, Bajaj Holdings, Central Warehousing Corporation, Punjab National Bank and Gujarat Agro Industries.
"The large base of warehousing facilities of CWC with storage capacity of 9.89 million tonnes will become available to the combined entity pan-India, which will help generate more liquidity due to wider participation of the larger base of active members of the combined entity," NMCE MD and CEO Anil Mishra said.