My reason for calling it a robbery is this: I hold something. Mr Ambani or his progeny want it. They make an offer, I accept it or not act on it.
Like the water finding its level, the share price would find its level. After holding it for 2 years, I may ultimately sell it at a 50% loss. Thats my luck and my outlook.
In this case, they are saying, “We are taking it at a price determined by us!”
Tell me is it fair? One may call it by whatever name one wants.
You may be right. Most probably you are. The market will set the price of a stock, be it Reliance Retail or Tata Technologies.
My argument is that it is not fair for the promoters to set a price for the share, and instead of making an offer at that price, simply take away my shares.
They are offering ₹1362. May be if I keep it, I may have to later sell it for ₹700. I will feel silly. But I will not feel robbed.
This move by Reliance will be challenged by minority shareholders comprising of American investment firm Silver Lake, KKR and Singapore’s GIC. Hope that they have enough power to withdraw or negotiate the price. Selling at loss makes no sense if the amount is small percentage of portfolio. Big amount stuck for long will be a problem.
Thanks a lot. I was wondering whether they are to be included in the minority share holders or among the promoters. The words used by them are ‘Promotor and holding company’, in singular, which means they are talking of the Reliance.
That being so, I am sure the big guys will put up a fight.
Thanks a lot. In morning I had nearly panicked into thinking of selling. You are right. I will hold on.
For me 2.5 lakh or so for 100 shares is a big amount, though thankfully not crippling.
I can’t understand how is this possible. Tomorrow listed company can also do this. They can do reverse book building till the prescribed limit. And say we are delisting it… Those who have unsurrendered their shares can be armtwisted like this.
Clause (ii) of sub-section (b) of section 66 of the Companies Act , 2013 allows a company to payoff any paid up share capital, which is in excess of the wants of the company.
But then approval of the NCLT is required. I am studying cases on the section.
There are better checks and balances in place for listed entities. Listed entities since traded on exchanges and regulated by Sebi has lot of data available for price discovery and cant be at whims and fancies of small ecosystem outside of their purview.
To your point on Reverse Book Building
“The Reverse Book Building is basically a process used for efficient price discovery. It is a mechanism where, during the period for which the Reverse Book Building is open, offers are collected from the share holders at various prices, which are above or equal to the floor price. The buy back price is determined after the offer closing date”. SRC NSE
So while floor price can be determined on basis of some formula by listed entities(again should be based on average closing price of a duration on exchanges, not completely arbitrarily), no one is forced to sell at that price. Remember Vedanta delisting failed.
Disc: no interest in any unlisted universe
Interesting but what about kkr,silver mile and other funds who had invested
These are the details of the big shot investors.
have deleted the above post as all the major shareholder have invested in Reliance Retail Ventures limited (RRVL) which is not impacted at all as it is the promoter of Reliance retail limited. Here Reliance retail limited shareholders will be impacted so none of these large shareholders will be fighting as they will also benefit in some way as investors in RRVL
One of the biggest challenges in buying unlisted shares of VC funded companies - is the anti-dilution clause.
So, in case of Pharmeasy, it was reported that in the last funding round which valued Pharmeasy at $4B, Dr. Velumani (Thyrocare) invested 1500 cr for a 5% stake, and speculation is that he had anti-dilution clause. So assuming that he was allocated shares at Rs. 50 per share - he owned 30cr shares.
Now, assuming that the anti-dilution kicks in for this new round which is reported to be at a 90% discount (Rs. 5 per share), he is to be awarded a total of 1500cr/5, i.e. 300 cr shares or 270cr incremental shares.
Now, we do not know if any of the other investors had such an anti-dilution clause - most likely they would, but the damage may not be as bad as above, because they would have invested at a lower valuation.
How does all of this impact the retail investor?
So, while assessing this new investment round of Rs. 2,500 cr at a reported value of Rs. 5 per share, one would draw a conclusion that 500cr new shares are being issued, but if one truly accounts the anti-dilutive clause, it would mean 100’s of crores of new shares being added. Further, the commentary on this new round states that the board is issuing additional shares to founders and current employees (they will have to do that for motivation sake).
At the end, all of these new shares are going to dilute your holding significantly
Note: This new round seems to be structured as a rights-issue. Experts here can point out if the anti-dilution clause would be triggered for a rights-issue transaction or not.
The unlisted space in india is still at very nascent stage for multiple reasons :
Try to avoid family controlled companies, except Tatas, if possible
I had bought Tata Tech at ₹813 average.
One may take a look at NSE too. NSE hardly needs any introduction. Its unlisted shares are going at @3750 or so. The PE is only 25.49. BSE PE is 96.4
No recommendation. My other unlisted shares are down from the time I bought them.
Came to know couple of days back, after seeing IXIGO’s IPO confirmation, that we have to wait for 6 months after the listing before we can sell the shares
I won’t mind for more than that if the stock is good.
I bought NSE from Nuvama (Edelweiss). 25% upfront payment and balance after 2 months. But shares got credited 7 months after initial payment. Entire payment done to Nuvama.
This week bought Polymatech @732 (dont know if the price is right but PE is ~27). Shares got credited to account in 2 days post 100% payment.
NSE there was lot of formality to be completed as the deal was through Nuvama but some contracts were directly with NSE - so dont think there is any lock in period in this.
Six months lock in post listing in Polymatech.
