Mumbai, Feb 23: A clutch of Indian institutional investors and banks have agreed to pick up around 15 lakh equity shares held by Ranbaxy Laboratories promoter Parvinder Singh and his associates at a price of about Rs 650 per share. The completion of the deal would translate into a realisation of Rs 98 crore for Parvinder Singh and his associates.Industry sources say that UTI, LIC, GIC and SBI are among the institutional investors to have agreed to pick up Singh's shares, amounting to about three per cent of the company's equity capital. The deal was handled by leading investment banker JM Financial. The current deal forms part of the 35 lakh equity shares (about seven per cent of the company's share capital)) that Singh and his associates had put on the block. Other banks and institutional investors are also understood to be vying for the remaining part of Singh's holding.
Parvinder Singh's move to privately place his shares is said to have been prompted by a desire to de-leverage his position consequentto the debts underwritten for subscribing to the warrants from the company's 1993 GDR issue.
Singh and his associates had spent approximately Rs 200 crore towards converting their warrants into equity after the GDR issue, which was offered to them at Rs 400 per share as against an issue price of more than Rs 600 per share for the GDR. Sources say that the culmination of the current deal is an indication of the confidence the institutional investors and banks have in the company. "Given that these investors do not take much of a position in these stocks, it reflects the confidence they have on the Ranbaxy management," sources said. These investment are obviously long-term in nature, sources added.
Analysts said that the completion of the deal could see the Ranbaxy scrip move upward given that supply had been capped. "The market price was hovering aroung Rs 690 per share since the deal had yet to be closed. Now if the deal has been struck we could see an increase in the price."
Parvinder Singh's plan toprivately place these 35 lakh Ranbaxy shares owned by him and his associates comes after his earlier attempts to place the equity failed to find favour with both the FIPB (Foreign Investment Promotion Board) and institutional investors. The FIPB had reportedly turned down Singh's proposal to sell 35 lakh shares of Ranbaxy Laboratories to an offshore special purpose vehicle (SPV) following objections raised by the department of economic affairs (DEA) in the finance ministry and the department of company affairs over the sale of locked-in shares.
Meanwhile, the Ranbaxy scrip opened Rs 5.75 higher at Rs 697 and closed at the same level, registering a meagre gain of 0.83 per cent with a huge volume of 37,620 shares.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
