Delisting Discussions

Hexaware Limited

Special Situation Play

Situation: Voluntary Delisting.

Offer Price: Rs 285/- share.

Floor Price: Rs 264/- share.

CMP: 321/- share.

52week High/Low: 455.70/201.70

Shareholding pattern:

Category % of total voting rights
Promoters 62.44
Mutual funds 12.70
FII/FPI 18.88
Public and others 5.98


Acquirer History :

Baring PE through its subsidiary, HT Global IT, acquired the stake from Atul Nishar Followed by open public offer at Rs 135/- share in Year 2013. Further stake was acquired in year 2014 at Rs. 195/- share

Reason behind De-listing : HT global IT (promoter) has outstanding Bonds to repay in July 2021, without privatizing it won’t be possible. Financing for privatization will be done through equity infusion by promoter (Baring PE India) in subsidiary HT Gobal IT. Since Hexaware generates free cash it will help promoter to reduce leverage at promoter level.

Risk is that if privatization doesn’t get through the HT Global won’t be able to repay its Bonds in 2021 which HT global won’t like to do. So possibility of delisting is High. The only question is final delisting price.

PS: This is the reason derived from Moody’s and Fitch’s credit reports of HT Global IT and is different from what they disclosed in offer letter.

Recent deals : The promoters sold 7.8% stake of the company at Rs 447.50 in August 2018. The price is 40% above the current market price.

Is Risk reward favorable if delisting get through:

Potential loss if the delisting get through: 10%

Potential gain : looking at the history of successful delisting in India successful bids have generally been higher by 40% to 50% of offer price.

What if the delisting becomes unsuccessful:

  • The Company is growing sales and profit @ 17-20% since last 10 years consistently.
  • Net Debt free company.
  • Generating free cash flows every year since last ten years consistently.
  • Dividend payout @ 3.5%.

The company is ninth largest IT Company in India. However there is Client and geographical concentration risk. 45 % of the revenue come from top 10 clients. Major Partner includes Microsoft.

The Demand for IT and automation and clouding is at inflection point after COVID-19

Time limit for Investment:

Other things remaining same it takes 3-4 months to get delisting completed.


The deal is a win win situation for Investors irrespective of Delisting proposal. At least deserve some allocation.


Can you help with some historical examples where successful delisting happened at 40-50% higher than offer price?

RICOH India, Polaris Consulting.
I didn’t particiapate in it. Learnt analsyis of the delisting thing in ITC-2020 from pratyush mittal and Anshul Saigal

Isn’t how much the offer goes above the floor price is a function of the amount of free float available relative to the total outstanding shares?

The bet will be more favorable if u can get public shareholding vs. promoter holding of the case studies u mentioned where the price went above 50-60%.

On that basis, a base case for this situation can be developed and position sizing can be adjusted accordingly. Right?

If the offer price is 285, floor price is 264, and CMP is 321, how could it be profitable proposition? Sorry for the stupid question but if someone can clear it up.

Promoters sold stake around 7-8 percent in 2018 at 447 per share via block deal. Since these block deal happens after considerable negotiations, I expect the delisting not to happen below that price. Since delisting will be through reverse book building the discovered price will be above floor price(probably). The reason promoters are going for delisting is enough to conclude that promoters will be desperate to delist.

Since free float is around 38 percent which is on higher side , I am not expectng price to go higher considerably but to the level block deal happened in 2018 i.e Rs 447/-. Company have to accept that else there are considerable chance of delisting failure. Which HT global can’t afford given their bond repayment due in July 2021.

Can you pls explain why it is not possile to repay bonds if not totally privatized…i am not aware of the fundamentals behind because i doubt is that if promoters do not have money to repay bond, then how they will have money to purchase free floating shares.

There are few more like Alfa Laval (India), Atlas Copco (India), Fairfield Atlas, Piramal Glass, Rhodia Speciality…
All these have also been delisted at around 40% to 50% premium to their Indicative price.

HT global IT solution holding is the wholly owned subsidiary of Baring PE (India) private limited. This de-listing will be financed through equity infusion by Baring PE in to HT Global. As far as financing is concerned the intention seem like Take the company private through delisting, find a strategic buyer as venture capitalist are interested in to not listed player ( As there is leeway to expand at promoters wish plus less compliances). Baring PE Will be sitting with Profits if able to realize price higher than delisting price. The funds through sale will be utilized to repay bonds.these links may help:

What happens if we buy with hope of delisting at 50% premium of indicative price and therefore do not relinquish our shares in delisting buyback…the delisting period gets over and delisting gets through at indicative price…in that case will we not be left stuck with our shares, which will be infact total loss of capital as nowhere to sell. There maybe some offexchange channels but who knows…can you pls guide here how can we hold our shares in hope of premium and at the same time ensure we are not left stuck with illiquid shares…thanks


See you are not necessarily required to wait till delisting to complete . How much some one want to earn depends on their risk appetite. There are never free lunches and risk is always embedded.
Second even if you don’t offer your shares in delisting process, within one year from the date of listing , you can offer your shares to the promoters at final delisting price. (Sebi regulations ).

Allright, so during the process, can we judge before delisting completes that will it go through or not and relinquish shares likevise?

Is this done via our normal dmat/trading account via exchanges,just like original delisting process, or is there another process for this to directly connect with company? Thanks

Normal demat account through reverse book building process.

keep tracking updates at promoter level. Otherwise no option but to wait for the events to unfold.

But what @Investor_No_1 specified is a huge risk of losing entire capital. I think ur answer need not be as you quoted that “risk is always embedded”. Kindly confirm that this is not a risk as u mentioned in 2nd point that we can sell directly to promoter within a year of delisting. As many of us are not aware of this process, this @Investor_No_1 question is vital.

Thanks for the previous 2 posts on justification of a aggressive buyback due to bond repayment

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The reason you won’t lose entire capital is :
First promoters are completely in mood to delist, in worst case price at which delisting will happen will be floor price.
Second, as mentioned company is ninth largest IT company backed by strong promoters, not stretched valuations, generating free cash flow and growing both top line and bottom line at 15% plus rate.

What I am telling you is as per SEBI’s regulations on delisting. The promoters are bound to accept the shares at final exit price for one year after delisting, if not offered at the time of delisting.