Record block deals! Dalal Street scores Rs 23,000 crore screamer, from a Voda assist

Mumbai: Indian stock markets hit a milestone on Wednesday, executing block deals worth nearly ₹23,000 crore, the highest in a single day, largely on account of Vodafone Group's sale of a stake in Indus Towers. In all, five major block deals were transacted, reflecting growing confidence among promoters, private equity funds and large institutional investors. The surge in block deal activity highlights robust demand from both domestic and foreign institutions seeking to execute large transactions through this avenue.

The previous record for single-day block deals was ₹17,854 crore on March 13, when British American Tobacco Plc (BAT) divested a 3.5% stake in ITC through the open-market transaction. That was worth ₹17,485 crore, one of the biggest block deals in Indian capital market history.

Earlier, on January 19, block deals worth ₹10,500 crore were executed. Tata Group holding company Tata Sons sold 23.4 million shares in India's largest software services exporter Tata Consultancy Services for about ₹9,300 crore on the day.


Experts noted that transactions on the stock market platform are more tax-efficient than off-market deals. "Trading on the stock exchange platform benefits from a lower capital gains tax rate compared to off-market trades," said Ketan Dalal, MD of Katalyst Advisors. "Off-market sales may occur if the negotiated price is higher than the prevailing stock exchange price, which typically happens in strategic sales. However, such sales attract a higher tax rate."

The ability of large investors, such as private equity funds, to make significant exits underscores the attractiveness of the Indian capital markets, said bankers.

"The ease of executing large block deals highlights the depth and liquidity of the Indian markets," said S Ramesh, MD and CEO, Kotak Investment Banking.

'Reflect Depth in Indian Markets'
"This has also boosted confidence among global private equity players and multinational companies for investing and facilitating easier exits, which were very challenging just a couple of years ago," Ramesh said.

On Wednesday, UK's Vodafone Group Plc sold an 18% stake in Indus Towers for ₹15,300 crore through block deals.

The Germany-based ZF Group sold a 7.5% stake in its Indian unit, ZF Commercial Vehicle Systems, for ₹2,194 crore. Shanghai-based Fosun Pharmaceutical Group sold a 5% stake in Gland Pharma to raise ₹1,754 crore. Similarly, Client Ebene and CVCIGP II Employee Ebene sold 6.25 million shares worth ₹750 crore in the car component producer Sansera Engineering.

Domestic institutional investors (DIIs) have purchased shares worth ₹2.22 lakh crore so far this year, while foreign portfolio investors (FPIs) have sold shares worth ₹57,000 crore. FPIs and DIIs are showing considerable interest in using the block deal window, said bankers.

"With election uncertainty out of the way, robust domestic mutual fund inflows and participation by FPIs have led to frenzied activity around block trades," said Jibi Jacob, head of India ECM, Jefferies. "However, if one looks at it more holistically, as our GDP grows, the capital market depth is also bound to grow through large IPOs and an increase in free floats through block trades and primary follow-on offerings."

Large block trades reflect depth in the Indian markets and help increase the free float, said Pratik Gupta, CEO and co-head of Kotak Institutional Equities.