Promoters on Dalal Street offload stake to pare debt

MUMBAI: Promoters of several listed entities have recently sold their stake to fund their business or reduce debt while several are in talks to pare their stake in the next few weeks.

For instance, promoters of real estate developer sold around 4% few weeks ago.

Promoters of India’s largest multiplex chain PVR sold their 14% stake to private equity player Warburg Pincus for Rs 820 crore even as Warburg Pincus LLC part exited Capital First by selling a 25% stake in the NBFC through open market transactions.

Few months ago, promoters of Adlabs Entertainment sold close to 6% stake in the company to NYLIM Jacob Ballas India LLC.

On Thursday, promoters of mid-size infrastructure company – RPP Infra Projects sold their stake to institutional investors such as Morgan Stanley Asia Singapore, Sundaram Mutual Fund Infrastructure Advantage Fund and Seven Hills Capital among others.

On Saturday, in its filing to stock exchanges, promoters informed that in order to capture the growth opportunities, the company has certain funding requirements.

The proceeds from the stake sale will be infused in the company as debt to meet these growth requirements.

RPP Infra Projects, which undertakes civil construction work for irrigation and water supply projects and power plants, and construction of civil infrastructure for residential and commercial structures for infrastructure projects, roads and bridges saw its stock price went up by around 7% on Friday to close at Rs 233.

The company currently has an order book of approximately Rs 800 crores.

With markets at all-time highs, analysts say several other promoters too may look to pare their stake for various reasons.

As economic slowdown is weighing down on debt-ridden balance sheets of several companies including large infrastructure companies resulting in asset sales and takeover by lenders, there could be several other sale which could either be exit from core business or stake sale by promoters.

Large infrastructure companies have already been cutting debt, selling non-core assets and in some cases have even knocked-off quality assets to ease the debt burden on the books.

Debt-heavy companies like HCC, JP Associates, ABG Shipyard, GMR Infrastructure, Bhushan Steel, IVRCL, Punj Lloyd and GVK Power and Infrastructure have been underperforming the markets.

Further, since the strategic debt restructuring rules were introduced, lenders have converted debt to equity in a number of firms, including Electrosteel Steels, Ankit Metal and Power, Rohit Ferro-Tech, IVRCL, Gammon India, Monnet Ispat and Energy, VISA Steel, Lanco Teesta Hydro Power, Jyoti Structures, GMR Rajahmundry Energy and Alok Industries.