The News
The biggest news on the market today is the stake sell by DLF. Though it was an expected move but the fact is that it has finally been done. DLF promoters have finally parted with a 10% stake in the company. The data on the BSE shows that 16.8 crore shares were sold in two different block deal at an average Rs 233.50 per share, thus raising around Rs.3900 crore. Prior to this sale, promoters holding stood at 88.5%.
Another stake sale also happened yesterday. BSE data revealed that the founders of Suzlon Energy raised Rs.231 crore by selling 30 million shares or 2% stake at Rs 77 each. The markets greeted this news also with a rise yesterday.
Cause Behind Stake Sale
Of the funds raised, Rs.2000 crore is to be used to purchase private equity D.E. Shaw's stake in DAL. DE Shaw had invested $400 million in DAL in 2007 and is due to exit by the end of the month under an agreement. It also has the option to buy 100% stake in its privately held property trust DLF Assets Ltd (DAL) for which the rest of the funds raised could be used.
Impact On Share Value
The market was very happy with this piece of news and DLF rose 5.40% to Rs 249 the moment this news broke out. After this stake sale, DLF expects to have debt of less than Rs.5000 crore by end of this year.
For DLF, this was good news as the stake sale will now put the much needed liquidity back into the company. Grappling with a cash crunch, this is probably the best solution it could have worked out. And what is positive also is that despite the stake sale, promoter holding continues to remain high and it does not dilute shareholders' stake.
Awaited Move
1. Stake sale is best when promoter’s stake is high. For the Tata’s, stake sale could have been the best way to get out this current financial bind that it is in. But low promoters stake will make this move impossible. Though it managed to do so in Tata Tele, doing so in other companies seems difficult.
2.There is also talk of Unitech planning to sell stake.
3.Reliance Communication was also rumored to be toying with the idea after it repurchased its FCCBs.
4.In fact unlisted Subhiksha, which is staring at the face of bankruptcy, is also looking at the option of stake sale.