Four major port trusts will buy the Central government’s 73.47 per cent stake in Dredging Corporation of India Ltd (DCI) for Rs 1,056 crore at Rs 510 per share.
Central government-owned Visakhapatnam Port Trust, Paradip Port Trust, Jawaharlal Nehru Port Trust and Deendayal Port Trust are paying a whopping 42.26 per cent premium a share to buy the government holding in DCI, at least two people briefed on the deal said, asking not to be named. On Friday, DCI stock closed at Rs 358.50 per share on the Bombay Stock Exchange.
The share purchase agreement will be signed by the four major port trusts and the government on 8 March, a government official, one of the two persons mentioned earlier, said. DCI’s public share holders who hold 26.53 per cent of the stock will not benefit from the deal.
Earlier this week, the Securities and Exchange Board of India (SEBI), exempted the deal from the mandatory open offer under the Take Over Code. The market regulator’s approval was holding up the finalisation of the transaction for which the price bid was submitted on February 4.
The four major port trusts have sought an exemption from the open offer provisions citing the deal between two central government-owned entities would not result in a change in management control – DCI will remain with the government. This would be the second such instance in recent times when the public shareholders have been given a go-by during disinvestment of a government firm.
State-owned oil explorer ONGC Ltd was exempted from making the mandatory open offer when it bought state-run oil refiner HPCL in 2018.
Besides, an open offer would have reduced the public shareholding in DCI to below 25 per cent from the current 26.53 per cent, thereby violating a SEBI rule for listed firms including PSUs to have a minimum 25 per cent public float to ensure wider public participation.
The four major port trusts have signed a memorandum of understanding (MoU) amongst themselves that sets out the share each port trust would hold in DCI - Vizag will hold 19.44 per cent with the other three taking an 18 per cent stake each. SBI Caps was hired by the four port trusts to prepare the bid.
DCI is India’s biggest dredging firm by fleet size and market share, mainly in maintenance dredging. The four major port trusts acquiring DCI together account for some 70 per cent of the maintenance dredging market at major port trusts. The Dredging Corporation deal is critical for the government’s plan to raise as much as Rs 80,000 crore through stake sale in public sector undertakings in the current fiscal.