BUD-REAX-PUBLIC-SHAREHOLDING

10% additional public shareholding to generate Rs 3.9 tln in
equity sales, but analysts not amused
    Mumbai, Jul 5 (PTI) The Budget proposal to increase
the minimum public shareholding by 10 percentage points to 35
percent can lead to promoters diluting their holdings worth
over Rs 3.87 trillion, say experts.
    However, most marketmen and analysts have flagged
concern on such a measure, saying it should not result in
"forced sales" of promoter stakes and the maximum sales
proceeds will come from TCS (Rs 59,600 crore), Wipro (Rs
15,000 crore) and D-mart (Rs 14,000 crore).
    Domestic brokerage Centrum Broking said a fourth of
all the listed companies or 1,174 to be specific, have
promoter shareholding above 65 percent at present.
    "At the current market prices, the total quantum of
sale that needs to be done by these 1,174 companies works out
to be a whopping Rs 3,87,000 crore," its head of research
Jagannadham Thunuguntla said.
    Law firm Shardul Amarchang Mangaldas partner Yogesh
Chande warmed that the move may force some companies,
especially the multinationals, to explore delisting.
    Consultancy firm KPMG's Vivek Gupta called for caution
while going ahead with such a move, including its timing and
applicability.
    "...we don't want this to be another 'forced sale',
even though this offers a good opportunity for institutional
capital and funds," he said.
    Thunuguntla said Sebi needs to give sufficient time to
meet this requirement so as not to flood the markets with
promoter stake sales.
    Chande said even though the country has been a
promoter-driven market historically, such a move has
advantages like wider ownership through institutional
investors, more market depth, better price discovery and
hopefully will enhance the corporate governance standards.
    Centrum said the top three companies which will see
the maximum quantum of sale will be TCS (Rs 59,600 crore),
Wipro (Rs 15,000 crore) and D-mart (Rs 14,000 crore).
    Presenting her maiden budget, finance minister Nirmala
Sitharaman said, "it is right time to consider increasing the
minimum public shareholding. I have asked Sebi to consider
raising the current threshold from 25 to 35 percent." PTI AA
BEN BEN

(This story has not been edited by THE WEEK and is auto-generated from a PTI feed.)