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Wipro Enterprises Ltd's proposal to reduce its share capital by extinguishing over 1.62 crore shares after buying them at Rs 367 apiece is fair and in the best interest of non-promoter stakeholders, according to proxy advisory firm InGovern.
The board of unlisted WEL has called for an extraordinary general meeting on January 13 to seek shareholders' nod for reducing the company's share capital to Rs 476 crore from Rs 492 crore.
As per the proposal, all non-promoter shareholders holding over 1.62 crore shares would surrender their scrips at a price of Rs 367 apiece.
Promoters have more than 96.7% stake in WEL and the offer price of Rs 367 per share to acquire stake from non-promoter shareholders values the company at Rs 18,068 crore, InGovern said in a report.
WEL was demerged from Wipro Ltd in 2013 as a separate entity. At that time, WEL was valued at Rs 11,000 crore.
The report said the present valuation of Rs 18,068 crore is 64% higher than the level of Rs 11,000 crore seen in 2013.
"Comparing the demerger-offer price with current offer price as well as comparing WEL with its peers, the offer price of Rs 367 per share is fair and being an unlisted company, it is in the best interest of shareholders to accept the proposal as an exit route," the report said.
WEL's consumer care and lighting segment contributes about 78% of its total revenues while the rest came from infrastructure engineering business.
"A buyback process may have left some residual shareholders that may have resulted in further buy back processes to be taken up by the company in future," InGovern said.
