MUMBAI, Mar 20: Indal, along with its advisor HSBC Capital Markets, has begun an exercise to woo foreign institutional investors (FIIs). The object of the exercise is to make the FIIs repose faith in the Indal management.This move may have followed the strategic upward revision of Sterlite Industries' offer price for 20 per cent in Indal. The FIIs own 17 per cent stake in Indal, including a 12 per cent stake in the form of GDRs, and this is being considered as a crucial amount in a company where the existing promoter, Alcan, has about 34 per cent.
Of the balance 65-odd per cent, 17 per cent is a crucial amount and hence the extensive exercise to target these investors, feel sources.
After the single-largest shareholder, Alcan of Canada, and the domestic financial institutions with at 36 per cent, the foreign stakeholders are the largest identifiable block, constituting more than the local public floating stock, which accounts for 11 per cent. Special attention would be targeted at CapitalInternational, which owns a substantial 4.5 per cent in the company's equity.
"The exercise has been kicked-off both in India and abroad on Thursday. It will continue irrespective of the recent revision of the offer price by Sterlite," said a source. "Even though the GDRs by themselves do not carry voting rights they can be unwound by the investors into equity shares. The basic idea behind the exercise is to clear certain apprehension about the performance of the company. We are talking to them about the achievements of the current management as well as the future plans of the company," the source added.
In fact, with Sterlite Industries timing its open offer to virtually coincide with the Indal drive to woo FIIs, the Indal management will have to struggle at a price disadvantage of Rs 10: the counter-offer price, with which Alcan of Canada is defending its stake in Indal, is Rs 105, whereas Sterlite has hiked the bid price further to Rs 115.
Sources said it is not going to be easy zeroing in on theFIIs, who own the shares as several of them may be holding the shares in street names and therefore may not be registered owners in the company's books.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
