FIs under pressure against Gesco stake sale

FIs under pressure against Gesco stake sale
ENS ECONOMIC BUREAU

MUMBAI, OCT 25: Financial institutions which hold around 30 per cent stake in Gesco Corporation - which is being targeted by the Dalmias - are under pressure from the Sheths against selling their stake in the company.

"The Sheths who hold only 13 per cent holding in the company are keen that FIs should not sell their stake. If FIs sell their stake, then Dalmia would virtually take over the company," FI sources said.

The Sheths are also trying to use the buyback route to shore up their holdings. "But small shareholders are unlikely to fall into the bait of the Sheths. When the Gesco shares were languishing for a long time, they never thought of buyback. The Sheths though of buyback offer only after a takeover attempt was mounted. I won't offer my shares if a buyback is announced," said a shareholder.

If the company manages to get some shares in the buyback scheme, promoters holding will go up automatically. This means they can shore up their stake using the company's funds. ``Sebi should not allow such things. Why should a promoter be allowed to increase his holdings using the company's funds? Promoter should opt for the creeping acquisition route whereby they can purchase shares from the open market like any other investor,'' said an investor.

It may be recalled that Delhi-based real estate developer AH Dalmia and associated had made an open offer to acquire 45 per cent holding in Gesco Corporation recently. Dalmia had already bought 5.8 per cent of its stake from the stock markets.

The Dalmias are also negotiating with institutions (both domestic and foreign) to increase their stake. FIIs and FIs are adopting a wait and watch attitude as they are expecting a counter offer by the Sheths.

The acquirer is also negotiating with Global Depository Receipts (GDRs) holders of Gesco for increasing the holding of the Dalmias in the company.Currently, GDR holders have a six per cent stake in Gesco.