Investors disappointed as 'open market' share buybacks lack punch

Actual acquisition cost 20% below max buyback price under open market route

Shares of One97 Communications (Paytm) fell nearly 2 per cent on the BSE on Wednesday, even as the company announced a Rs 850-crore share buyback. Investors were disappointed by the open market route opted by the company as opposed to the tender route.

Market players said the buyback size and the maximum buyback price under the open market route are just optics as companies tend to buy back shares at a much lower rate. Also, rarely is the entire buyback amount ever harnessed.

By comparison, the tender route is definitive. The company buys back shares only at the maximum price