The Hindu Business Line : Price discovery process propels e-Serve International

THE simultaneous valuation processes of the e-Serve International stock in the open market and the reverse book building bids are clearly giving a signal of a price discovery way above the floor price of Rs 735, fixed by the Citigroup for acquisition though book running.

The book building exercise, opened on August 13 and will close on August 19, saw the majority of the supply come at Rs 975. Though till date only 39 per cent of the total size of book has been build.

In the open market the stock today closed at Rs 917, after touching a high of Rs 923.

Citibank Overseas Investment Corporation in April (at the time when the proposal was first mooted) this year had said that a price of Rs 800 per share presented a compelling opportunity for e-Serve's shareholders. This price represented a premium of 27 percent to the closing price of Rs 630 per share on April 8, 2004.

According to foreign fund manager, it appears that Citigroup has to fork out a price of around Rs 1,000 per share of Rs 10 each if it wants to have 100 per cent ownership. Citigroup currently owns 44.4 per cent of the stake in e-Serve.

SEBI recently informed e-Serve International that its voluntary delisting offer will succeed only if the public shareholding falls below 25 per cent.

"As per our calculations the group needs to acquire further 38.44 lakh shares (another 31 per cent) to delist the company," said Mr Devarsh Vakil of Anagram Stockbroking. Incidentally, Citibank Overseas Investment Corporation reserves the right not to acquire the offered shares if the final price, as established by the SEBI's delisting guidelines, is more than Rs 800 per share.

Recently, the exit price determined from the reverse book-build process for AstraZenca Pharmaceuticals AB of Rs 3000 per share was rejected by the company and the process failed.

As e-Serve's largest shareholder and sole customer, Citigroup has decided to have full ownership of the BPO outfit and integrating it into its global operations, which will provide increased operational flexibility to support e-Serve business and meet the needs of its customer.

As per the SEBI delisting guidelines, Citibank Overseas Investment Corporation, a wholly-owned subsidiary of Citigroup, intends to acquire the outstanding e-Serve shares.

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