India to see ` 35K cr share sale by June

Market analysts remain sceptical about the market’s ability to absorb such a massive share sale

With just a month remaining to comply with the minimum public shareholding norms prescribed by the Securities and Exchange Board of India (SEBI), the secondary market is all set to witness a massive amount of share sale by listed firms.

However, market participants doubt the ability of the markets to absorb such a massive share sale programme, as over 100 com- panies are yet to comply with the new norms.

According to market estimates, shares worth `35,000 crore are expected to hit the market.

In 2010, the stock market regulator mandated that listed private sector companies as well as public sector enterprises must have at least 25 per cent public shareholding by June and September 2013 respectively.

“It may be quite challenging for the market to absorb around 100 issua- nces within such a short span of time,” commented Jagannadham Thunuguntla, head of equity, SMC Global Securities.

According to him, some of the companies could opt for delisting while few may seek further time from the regulator.

Issuing a stern warning against non-compliant companies, the Sebi chairman U. K. Sinha at a recent event made it clear that the regulator would not extend the June 2013 deadline and companies, that fail to

comply with the regulato- ry norms would face serious consequences.

However on an optimistic note, Aneesh Srivastava, chief investment officer (CIO), IDBI Federal Life Insurance said, “If the secondary market conditions remains buoyant, companies won’t find it that difficult in complying with the regulatory requirement. Even otherwise, there will be enough takers, if the shares are offered at a discount”.

There are roughly about 110 private listed firms and 10 public sector undertaking that are yet to comply with the minimum 25 per cent public shareholding norms. Major among them include DLF Ltd, Oracle Financial, Adani Enterprises, Astrazeneca Pharma among others.

While DLF, Purvankara and Oberoi Realty have initiated the stake sale process through the institutional placement programme, others like Adani Enterprises, Fortis Healthcare, AstraZeneca Pharma and Timken India said they would comply with the regulatory requirement before the expiry of the deadline.

“As far as PSU stake sale is concerned, there would always be LIC and few other banks to bail them out. However, when it comes to mid cap stocks in the private listed space, many of them would find it difficult to get enough buyers,” said Ambareesh Baliga, managing partner, Global Wealth Management, Edelweiss Financial Services.