Financial institutions are expected to wait till the very end of the offer period before deciding on their stance and whether they will place their shares in the two open offers made by Hindalco and Reliance for Indal and BSES Ltd, respectively.
A top-level FI source said: "We are waiting for the situation to unfold. What is the need to hurry things now? It is better to watch for emerging developments before taking a decision."
Underscoring the fact that a decision would only be taken in the last few days of the offers, FI sources pointed out that the major drama witnessed in the battle between Alcan and Sterlite over Indal in 1998 had now led the FIs to believe that things can change during the offer period rather dramatically. "We remember what happened then...how things kept changing till the very last minute. We are therefore being careful this time", the sources said. The sources said they were also keeping their options open in case other bidders emerged on the scene. The Hindalco offer for Indal, at Rs 190 a share, opened Friday. The Reliance offer for BSES, for an additional 20 per cent, has been priced at Rs 234 per share.
The institutions played a critical role last time there was a battle for Indal, with Alcan and Sterlite fighting a tooth-and-nail battle for control of the Calcutta-based aluminium maker. This time, however, things are far more peaceful, with Alcan completing a negotiated deal for its own stake with Hindalco, and thereafter Hindalco making an open offer which would take it to an unassailable position as far as stakeholding is concerned. Hindalco has already negotiated a 54.6 per cent stake buyout from Alcan, involving a Rs 738 crore deal. Just before the open offer began Friday last, the Securities and Exchange Board of India (Sebi) had allowed investors stuck with frozen shares arising out of the earlier offer from Sterlite, to withdraw their shares from the registrar and offer them to Hindalco if they so desired.
In Reliance's case, the company is making an open offer for another 20 per cent stake in the company. This is also in line with Reliance's major moves in the power sector and to make it a massive player in the convergence sector as well. Reliance already holds close to 15 per cent in BSES, a company being seen as critical to Reliance's strategy for the infotech, communications and entertainment (ICE) sector.
