Mumbai, Oct 5: The Ahmedabad-based Torrent group will not pick up more than 15 per cent of institutional holding in the Ahemedabad Electricity Company (AEC) after having mopped up around five per cent from individual shareholders in the open offer.

The offer to acquire the AEC scrip at Rs 117 per share opened on September 8 and closes on Tuesday. Torrent now has 36 per cent in AEC, which includes the Gujarat government's ten per cent stake being divested in its favour. The state holds 28.89 per cent in the company and plans to offer the balance 18.89 to Torrent at a later stage "and at a price higher of market price as determined as per Sebi formula". The financial institutions have now scheduled a meeting on Monday to decide on offloading their 33 per cent stake in AEC. They will either opt for proportional divestment or consider complete offloading of a particular institution. At present, the Life Insurance Corporation of India holds 12.86 per cent, General Insurance, 11.56 per cent, while the Unit Trust of India holds 9.26 per cent in AEC.

As per SEBI regulation 21 (6) regarding substantial acquisition of shares and takeover, Torrent is obliged to pick up only 20 per cent through its current offer. In case the response exceeds this level, the company shall purchase on a proportional basis, the guidelines say. Torrent Power Ltd (TPPL), through which the offer was made on September 8, is a joint venture between the Torrent Group and MCN Investment Corp of the US. Torrent holds 60 per cent in TPPL with the balance held by the foreign partner.

As per the Torrent group strategy, it wants management control of AEC while holding a maximum 51 per cent stake. Once the company acquires the Gujarat government's balance stake to be divested in its favour, its holding in AEC will stand at around 70 per cent. However, the group will still have an opportunity to restrict its stake to 51 per cent when AEC goes in for equity expansion. It may be recalled that the power utility has already planned to invest Rs 1,900 crore for expansion towards which part funding will be done through equity enhancement.

The AEC share has seen little upward movement on the Bombay Stock Exchange. Before the offer opened on September 8, it was being quoted at Rs 83 per share. Now, with two days to go before the offer closes, the share is back at this level after having touched a high of Rs 95 last week.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.