MSEI Plans Rs 1,000-Crore Fundraise, Attracts Key Market Players

The Metropolitan Stock Exchange of India is set to raise another Rs 1,000 crore by issuing 500 crore shares at Rs 2 each, including a face value of Rs 1 and a premium of Rs 1 per share, as per their media statement. The board has also cleared amendments to the company’s Memorandum of Association as part of the fundraise.

The capital will come from a mix of venture capital firms, brokers, Alternative Investment Funds, and family offices.

Among the key investors likely to participate are Peak XV Partners and Monarch Networth. Other names include Share India, Trust Investment Advisors, Jainam Broking, Marwadi Chandarana, KIFS, and Evolve Capital.

The exchange is slated to use Tuesday as its weekly expiry, which it will be sharing with India's leading exchange, the National Stock Exchange. In an attempt to stay lucrative, the exchange is also considering a planned venture into the cash market.

In December last year, the exchange had started preparing for its revival, with backing from Groww's parent company and Zerodha’s Rainmatter. At the time, MSEI had aimed to raise Rs 238 crore, according to disclosures made by the exchange.

While the exchange has existed since 2008, it had to revamp itself owing to a leadership change after the NSEL scam. Since then, several large institutions have invested in the exchange.

The list includes banks like Union Bank of India, State Bank of India, Bank of Baroda, Punjab National Bank, Indian Bank, Bank of India, Axis Bank, Indian Overseas Bank, Canara Bank-Mumbai, HDFC Bank Ltd., and UCO Bank.

In a letter to SEBI in January 2022 that was highlighted in the regulator's 2023 order, MSEI outlined its bleak future prospects, including the possibility of closing down or merging with another exchange. The exchange had been reporting a decline in trading volumes since July 2021.

MSEI also struggled to implement new business initiatives or improve its overall performance. Its net worth had been continuously eroding, with the letter warning that if the exchange's net worth fell below Rs 100 crore, it would be required to shut down.

Following this, in the 2023 order, SEBI flagged irregularities at MSEI. However, the observations by the markets regulator were shut down by the Securities Appellate Tribunal as it ruled in the favour of the exchange.