Once in a while the market throws up opportunities which are relatively risk-free. De-listing of shares and mergers of companies are some of the safest trading opportunities that the market presents. However, in most of these cases, it is the insider who makes most of the money. Normal investors do not get a chance to enter the trade till there is very little money left on the table.
There are, however, certain relatively risk-free bets that one can look at. Presently, there are two such cases that one can capitalise on. Thomas Cook and IVRCL Infrastructure. Both have different reasons that make them attractive.
In case of Thomas Cook, the parent company is in a financial mess and has few good assets in its books to crawl out of the situation. One such asset is the Indian arm which is listed on the bourses. The parent holds 77 percent stake in Thomas Cook (India) and wants Rs 1,716 crore for it (Thomas Cook pegs 77% stake at Rs 1,716 cr, Travelex top bidder). This works out to a share price of Rs 105 per share. The Thomas Cook (India) share closed at Rs 69.80 on Wednesday, April 11, 2012.
Any acquirer of the stake from the parent company will have to make an open offer, which will result in de-listing of the stock as per the recent Takeover Code guidelines, which requires a minimum shareholding by the parent company.
The parent company has been reported to have appointed a merchant banker and legal consultant to sell its stake. Thus, Thomas Cook offers a relatively safer bet to cash in on, as long as the parent’s expectations are met.
The second company, though a comparatively riskier investment bet, is south-based infrastructure major IVRCL. There is a hostile bid on the company by media baron Subhash Chandra through his Essel Group of companies. The group has already acquired more stake in the company than its present promoter Sudhir Reddy. As per the latest available information, Essel Group holds 12.3 percent in the company as compared to 11.18 percent held by the promoters.
The promoter of IVRCL is short on cash and is in talks with various sources, including the company’s joint venture partners (in individual projects that the company undertakes) to fund his acquisition of shares. In other words, both parties will be stepping over each other’s toes to increase their stakes. Reports, which were later denied, say that Essel group had made an offer to buy out the promoter at Rs 105 a share. IVRCL was last traded at Rs 70.75 on Wednesday, April 11, 2012.
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IVRCL may offer a short-term opportunity, but the fluctuations can be wild as the two parties slug it out to increase their stakes. Uncertainty will, however, make the stock volatile in the near future.
Though both the stocks have run up, there may still be some steam left in them.