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With SEBI mandating that all listed companies have to increase public shareholding to a minimum 25% by June 2013, companies have to take a call sooner or later whether to reduce promoter holding or go for delisting mechanism, SMC Global head of research Jagannadham Thunuguntla said
New Delhi: The stock market is witnessing a slew of delisting offers, including those of UTV Software and Patni Computer—a trend being attributed by experts to an opportunity for the promoters to buy out the minority public shareholders at low valuations prevailing currently, reports PTI.
Media and entertainment firm UTV Software Communications and Carol Info Service, which provides contract manufacturing service for nutraceutical and milk-based products, have already begun the process of their voluntary delisting plans.
In addition, Japanese auto component maker Exedy Corp would float delisting offer for its BSE-listed unit Exedy India between 24th January and 31st January.
Sweden-based Alfa Laval Corporate AB has also announced plans to delist its unit, Alfa Laval India, from domestic bourses by offering Rs2,850 a share to public shareholders.
US-listed software firm iGate in November said it would delist shares of its unit, Patni Computer Systems, at floor price of Rs356.74 a piece to public shareholders.
Several other multinational companies (MNCs) may also come out with delisting offers for their Indian units in the next few months.
According to brokerage firm ICICI Direct, Oracle Financial Services, Novartis, Honeywell Auto, Thomas Cook, Singer, Gillette, AstraZeneca Pharma, Blue Dart, 3M India among others, as probable candidates.
“Many companies are coming out with delisting offers in order to comply with the Securities and Exchange Board of India’s (SEBI) guidelines,” SMC Global head of research Jagannadham Thunuguntla said.
With SEBI mandating that all listed companies have to increase public shareholding to a minimum 25% by June 2013, these companies have to take a call sooner or later whether to reduce promoter holding or go for delisting mechanism, he added.
The corporates, particularly fundamentally strong MNCs, may not have the inclination to increase their public holding and therefore could resort to delisting to have better flexibility in taking business decisions.
“The case for delisting becomes stronger in the current weak trend prevailing in the equity markets, which has led to a substantial fall in stock prices providing an opportunity for such corporates to buy out the remaining stake with the public at lower valuations,” Pankaj Pandey, head of research at ICICI Direct said.
“The chances of a delisting offer succeeding also appears higher due to a moderation in return expected by the public shareholders and the enhanced willingness to exit the stock even at a marginal premium to current stock prices,” he added.
Walt Disney's delisting offer of Rs835.03-Rs1,000 a share for UTV Software shares opened on 16th January and close on 20th January. The Khorakiwala Group would also launch a delisting offer for shares of group firm Carol Info Services during the same period.
The company is planning an initial public offering (IPO) of its undersea cable assets Flag Telecom, seeking a valuation of $2 billion. Under the offer, Flag Telecom will be listed as a business trust and Deutsche Bank is working on the deal
New Delhi: Anil Ambani-led Reliance Communications is looking at raising up to $1.5 billion (over Rs7,560 crore) through listing of its undersea cable unit Flag Telecom in Singapore, reports PTI.
According to sources, the company is planning an initial public offering (IPO) of its undersea cable assets Flag Telecom, seeking a valuation of $2 billion.
Under the offer, Flag Telecom will be listed as a business trust and Deutsche Bank is working on the deal, they added.
The deal may see selling of 75% stake in Flag Telecom.
When contacted, a company spokesman said, “Reliance Communications (RCom) continually works on various options to unlock value from its unique combination of global telecom assets, for the benefit of its shareholders.”
RCom had acquired Flag Telecom, the undersea cable business, in 2003 for about $207 million.
RCom has been exploring various routes of raising funds, including selling stake in its telecom tower arm, Reliance Infratel.
Last year, a deal to sell stake to tower major GTL Infrastructure for $11 billion ( Rs50,000 crore) fell apart.
As of quarter ended September 2011, the company has a debt amounting to nearly Rs32,000 crore.
On Tuesday, RCom had announced that three leading Chinese banks have agreed to refinance its outstanding foreign loans worth Rs6,125 crore. This is the biggest ever overseas loan refinancing arrangement by any Indian company.
The refinancing for RCom’s outstanding FCCBs (Foreign Currency Convertible Bonds) worth $1,182 million (Rs6,125 crore) would be provided by Industrial and Commercial Bank of China (ICBC), China Development Bank (CDB) and Export Import Bank of China (Exim), among others.
RCom is the flagship company of Anil Ambani-led Reliance Group. The group has a networth in excess of Rs89,000 crore ($19.7 billion), cash flows of Rs10,900 crore ($2.8 billion), net profit of Rs3,600 crore ($0.8 billion).