48 private companies likely to sell shares worth $1.8-billion by June

As many as 48 private sector companies are expected to offload shares worth about $1.8 billion (about Rs 9,900 crore) in the next five weeks to meet the minimum public holding of 25 per cent.

According to a report by Bank of America Merrill Lynch, there are about 48 companies that currently have a public holding of less than 25 per cent.

These include Adani Ports, Adani Enterprise, Omaxe, Bajaj Corp, Sun TV Network, Fortis Healthcare, Essar Ports and JSW Energy.

The list also comprises Tata Teleservice, Tata Communications, Berger Paints, Astrazeneca Pharma, Oberoi Realty and Thomas Cook.

Together these companies would need to sell shares worth $1.8 billion to meet the norms.

“While we have witnessed a flow of deals from the companies to either lower their promoter shareholdings or de-list from the exchanges, there are still 48 private companies with more than 75 per cent promoter shareholdings,” the report said.

“While recent listings such as Bharti Infratel and L&T Finance would get extensions, some other companies may have received some extension due to ongoing deals and the resulting restructuring,” it added.

The report said companies such as Oracle Financial Services, Bajaj Corp, Linde and Omaxe are already in the process of offloading promoter shares via the Offer for Sale (OFS) route.

Besides, there are some companies such as Fresenius Kabi and Chettinad Cements that have initiated the de-listing process.

In addition, there are 12 PSU companies that have over 90 per cent Government holdings. These companies are together required to offload shares to the tune of $750 million to comply with SEBI’s guidelines by August.

“We estimate that there could be supply of $1.8 billion by June and $2.5 billion by August to comply with these SEBI guidelines,” the report said.

According to the new norms for listed firms, implemented in June 2010, all private sector firms have been asked to attain a minimum public holding of 25 per cent by June 2013, while public sector entities were asked in August 2010 to increase their public holding to at least 10 per cent by August 2013.

Market experts believe that the stock market does not have the appetite to absorb share sales worth more than Rs 10,000 crore offered by these companies within five weeks.

“Many big corporate houses or companies having sound fundamentals would be able to pare the promoters’ holding, but the same would not be true for small firms as the market does not have the appetite to absorb the shares offered by them,” CNI Research Kishor Ostwal said.

The Institutional Placement Programme (IPP) and OFS are the two new share sale tools introduced by the regulator in January last year, especially to help corporates increase their public float.

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