Mahindra & Mahindra (M&M) today said it would sell up to 8.09% stake in its subsidiary firm Mahindra Holiday & Resorts India (MHRIL) in the next 16 months, which could be worth over Rs 225 crore.
The company, which holds 83.09% in MHRIL, said the move was primarily to comply with the statutory requirement for listed companies to reach a minimum threshold of 25% public shareholding.
"We plan to divest a total 8.09% stake in MHRIL's equity share capital in small lots over the course of the next 16 months through the market," Mahindra & Mahindra President (Finance & Legal) Uday Phadke said.
Based on today's closing price of Rs 333.25 per share of MHRIL on the Bombay Stock Exchange (BSE), the stake could be worth Rs 227.08 crore.
According to The Listing Agreement and the Securities Contracts Rules, 1957, existing listed companies having less than 25% public shareholding are required to reach minimum threshold of 25% by June, 2013.
In addition to meeting the statutory requirement, this sale will significantly improve the float of MHRIL shares in the market, Phadke said.
The company said the stake sale would be done in various tranche and would be completed before June 2013. "The first tranche may happen in the near term," it said.
Shares of MHRIL closed at Rs 333.25 on the BSE, up 4.73% from previous close.
