Mumbai: Promoters of companies that went public in the last two years (2015 and 2016) need to shed stakes worth close to Rs9,928 crore over the next 12-24 months to comply with Securities and Exchange Board of India (Sebi) norms on minimum public shareholding in listed companies, a Mintanalysis shows.
According to Sebi norms, listed companies have to ensure a minimum of 25% public shareholding in three years from the time of listing.
Companies that need to shed the largest quantum of stakes include ICICI Prudential Life Insurance Co. Ltd and two L&T group companies—L&T Infotech Ltd and L&T Technology Services Ltd—all of which went public in 2016.
Promoters of ICICI Prudential Life Insurance Co. need to sell at least 5.72% stake to meet the norms, which at last close means a share sale worth over Rs3,300 crore. L&T Infotech and L&T Technology Services need to sell shares worth over Rs1,000 crore each.
In September, Bloomberg reported that ICICI Prudential Life Insurance Co.’s promoters, UK’s Prudential Plc and ICICI Bank Ltd, are considering a possible deal to pare stakes in the next few months to meet the minimum requirement of 75% public float. ICICI Bank and Prudential are considering selling a 6% stake through multiple transactions, Bloomberg said.
Inox Wind Ltd, which listed in April 2015, has the shortest time to meet the norms. Promoters of Inox Wind need to shed 10.6% stake in the company, worth around Rs265 crore, by April 2018.
However, a steep fall in the company’s stock price could become an obstacle to such a share sale. From its listing day close of Rs438 per share, the Inox Wind stock has fallen to Rs113.55 a share, as of Wednesday.
Since the start of 2017, the stock has declined by almost 40%, data from stock exchanges shows.
So far this calendar year, a couple of companies have already made efforts towards reducing promoter shareholding, taking advantage of the liquidity in the stock markets.
In September, InterGlobe Aviation Ltd, which runs the IndiGo airline, sold a total of 33.5 million shares through an institutional placement programme (IPP), reducing promoter shareholding to 77.91% from 85.85% at the end of the June quarter.
IPP differs from the other institutional share sale routes—qualified institutional placement (QIP) and follow-on public offering (FPO)—in that only companies with a promoter shareholding of greater than 75% can use this.
Earlier in August, Thomas Cook (India) Ltd-owned business services firm Quess Corp. Ltd sold shares worth Rs873.92 crore through an IPP, reducing promoter shareholding by 7.06%. As of 18 August, Thomas Cook (India) owns 81.89% in Quess Corp and needs to shed another 6.89% to meet Sebi norms.