Higher open offer threshold leads to action in firms where an entity holds close to 15%.
On Tuesday, stocks like Sesa Goa, EIH, Petronet LNG, Shree Cement, Syndicate Bank, Jindal Saw, Triveni Engineering, KSK Energy Ventures, Vascon Engineers, Time Technoplast, Titagarh Wagons, Gati and Nectar Lifesciences were among those that saw volumes touch much above the respective two-week averages.
On Monday, the Takeover Regulations Advisory Committee headed by C Achuthan recommended an increase in the acquisition threshold for the initial trigger of an open offer, from the current 15 per cent to 25 per cent of the voting capital of a listed company. In other words, the recommendations, if accepted by the market regulator, would allow entities that currently hold in the range of 12-14.99 per cent to increase their stake without worrying about triggering an open offer.
The market is already buzzing with talks that the new Code, once notified, would see many private equity players and institutional investors raising their stake in companies where their current holding is 10-12 per cent.
In a report released on Tuesday, Macquarie has said the takeover panel’s recommendations would make funding and strategic investments easier. "With a higher trigger limit of 25 per cent, Indian companies will find it easier to get funding for strategic partners, as they can own a more meaningful share," it says.
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According to the global financial major, companies like Cairn India, Idea Cellular, Moser Baer, KSK Energy Ventures and Himadri Chemicals could see a rise in the stakes held by strategic investors once the recommendations are notified.
On Tuesday, KSK Energy Ventures saw more than 71,000 shares changing hands on the Bombay Stock Exchange (BSE). It was higher than its two-week average of around 56,000 shares. Similarly, Sesa Goa saw a significant spurt, with 8.54 million shares being traded on BSE, higher than its two-week average of less than 6.5 million shares. Franklin Templeton Investment Funds holds 10 per cent in the mining company.
These were not isolated instances. The counter of Shree Cement saw 267,000 shares being traded, much higher than the two-week average of around 32,000. FLT Ltd has a stake of 10.33 per cent in the cement entity. In the case of East India Hotels, where ITC holds 14.98 per cent, nearly a million shares were traded on BSE. The counter’s two-week average is pegged at 233,000.
Syndicate Bank, where Life Insurance Corporation holds 11.04 per cent, saw the volume more than double on Tuesday. On the BSE, 3.2 million shares were traded, while the two-week average is less than 1.3 million.