Goldman Sachs, the biggest independent Wall Street firm, today bought an additional Rs 35.75 crore worth stake in ICSA India, at 28 per cent premium to the company's stock price. The Wall Street major did this by exercising an option to convert warrants into equity.
The Goldman move comes at a time when ICSA's stock has plunged 72 per cent since January and the benchmark Sensitive index has dropped 44 per cent in the period.
Goldman was allotted 1.75 million shares in ICSA raising the investment banks' stake to 5.7 per cent. The warrants were converted at a price of Rs 227 each. Goldman had paid 10 per cent of the value earlier, or at the time it was issued the warrants.
ICSA shares today fell 3.23 per cent to Rs 163.30 at the close of trading on the Bombay Stock Exchange. The Sensex fell 3.14 per cent to 11,328.36. "The conversion at a premium shows Goldman's faith in the future of the company,'' said G Bala Reddy, managing director of ICSA. ICSA, which is in the business of reducing transmission and distribution (T&D) losses, is slated to benefit from India's large budget earmarked for the purpose.
The Southeast Asian nation has set aside about Rs 55,000 crore under the Accelerated Power Development and Reform Programme -II to cut T&D losses. It earlier planned to spend Rs 40,000 crore under a similar plan. According to sources, Goldman in the past has booked profit from its investments in the company as the investment bank has been selling stake at higher levels.
ICSA is 51 per cent owned by foreign institutional investors. CLSA is among the biggest overseas shareholder with 8.22 per cent stake. Credit Suisse owns 3.19 per cent stake, while Deutsche Bank and Government of Singapore own over 5 per cent each in the company.
