August 15, 2020

Ineos Styrolution delisting failure to have bearing on different ongoing delistings

MUMBAI: Shares of Ineos Styrolution hit the 20% decrease circuit restrict on the BSE Friday after its UK-based promoter rejected the found worth of Rs 1,100 for its delisting and didn’t even present a counter-offer to the shareholders.

This was the primary time, provision of counter-offer was utilized by any promoter below the Delisting Rules, which permits the promoter to supply a revised supply to the shareholders – decrease than the found worth. The rules allow the promoter to stroll away if the value found by the Reverse Guide Construct course of is larger than Promoter expectations.

The inventory worth of Ineos closed at Rs 700 on Friday, and is predicted to fall additional within the coming days, analysts mentioned.

The failure of Ineos delisting could have bearing on the opposite ongoing delistings like that of Hexaware, Vendata and Adani Energy, the place the shareholders had constructed up expectations by way of windfall positive aspects from the delisting.

“Traders mustn’t go overboard in making the guide by reverse guide constructing. The failure of delisting is a sound risk if the value runs forward of the promoters’ monetary capability. Already, there may be muted motion in delisting area. For example, Vedanta inventory worth has been buying and selling on the similar degree for nearly a month. Equally, in case of Hexaware, for the reason that promoter is a non-public fairness fund, it could have larger worth sensitivity than that of strategic traders or a promoter,” mentioned an funding banker.

“Going ahead many firms won’t run up the way in which they’ve executed up to now on the announcement of delisting,” he added.

Ineos Styrolution APAC, which presently owns 75% within the Indian subsidiary — had introduced the voluntary delisting at Rs 480 per share in August final yr. The inventory, which was buying and selling round Rs 450 earlier than the announcement, had doubled on expectation of an enormous premium through the delisting.

Giant public shareholders like Nippon India Mutual Fund and Sundaram Mutual Fund, which held 3.96% and 1.84% stake, respectively, in Ineos as on March 31, tendered their shares at Rs 899 per share, in response to sources. Another traders have additionally tendered their shares for as excessive as Rs 3,000 per share, the sources mentioned.

That is the second delisting of a multinational firm within the final 18 months the place the found worth has been rejected by the promoter group. Earlier, BOC Group rejected the found worth of Rs 2,000 per share for its Indian arm Linde, as towards the ground worth of Rs 428.50.

Reliance Mutual Fund (now referred to as Nippon India Mutual Fund), which owned round 9.85% stake in Linde, had positioned its bid above Rs 2,000 at the moment.

“This has additionally come as a studying lesson for shareholders, that promoters won’t delist their firms at any worth”, mentioned an analyst that tracks delisting.

“The failure of Ineos’ delisting reveals that traders ought to be cheap by way of their positive aspects in delisting,” mentioned one other funding banker. “They need to not go overboard in making the guide by reverse guide constructing.”

Promoters of three different firms — Vedanta, Hexaware Applied sciences and Adani Energy — have additionally introduced delisting plans from Indian bourses.