Max India Chairman Analjit Singh, who currently holds four per cent stake in EIH Ltd, today said he would subscribe to the Rs 1,300-crore rights issue announced by the hospitality firm.
Earlier this year, Singh had reduced his shareholding in EIH from seven per cent to four per cent.
Singh’s interest in the rights issue could be seen as part of a bigger story, including other stakeholders such as Mukesh Ambani-led Reliance Industries Ltd and hospitality company ITC Ltd.
According to analysts, Analjit Singh’s decision to subscribe to the rights issue could be due to an intention to make some long-term financial gain.
“If the issue is priced attractively, Singh could subscribe as it may provide him financial gain when he exits EIH later,” Elara Capital Analyst Himani Singh said.
More From This Section
According to her, the issue is expected to come out in the next month and RIL will surely subscribe, in order to raise its equity.
EIH operates the Oberoi and Trident brands of hotels and resorts across India and is promoted by P R S Oberoi. ITC holds 14.98 per cent stake.
In a sudden development, RIL had last month announced acquisition of 14.12 per cent from the promoter’s stake in EIH for Rs 1,021 crore. RIL further raised its stake to 14.8 per cent.
According to industry observers, RIL’s buyout was aimed to disable ITC from making a hostile bid for EIH.
Earlier this year, ITC had increased its stake to 14.98 per cent in EIH, triggering speculation that the FMCG-to-hospitality conglomerate could go for an open offer once it crosses the 15 per cent mark.
On September 23, EIH informed stock exchanges that the company’s board had given approval to raise up to Rs 1,300 crore through the issue of shares on a rights basis. The date for the rights issue is not final yet, as a committee has been constituted to finalise the ratio, issue price and all procedural modalities.