The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2020 Euromoney, a part of the Euromoney Institutional Investor PLC.

Hostile predator prowls the subcontinent

A wakeup call is hardly ever welcome. Core shareholders of Indian companies are being jolted awake by a hostile predator, a rare event in corporate India. In October, Renaissance Estates, a Delhi-based company owned by Abhishek Dalmia, made an open offer to buy Gesco, a property company owned by the Sheths, a prominent industrialist family with interests in the shipping business. Dalmia had bought up just over 10% of Gesco's shares in the market, and bid for another 45% to gain control from the Sheths who own around 13%.

Dalmia's move was well timed. Gesco was demerged from the Sheths' family businesses early this year. Minority shareholders were hardly rewarded as Gesco's shares traded at around Rs10 ($0.21), around a fifth of their book value. Dalmia offered them Rs27 for each share. At that price, Dalmia would have to fork out Rs300 million to gain control of Gesco.

His pay-off? Gesco owned valuable property worth Rs1.2 billion and had Rs300 million in cash. Says TV Raghunath, vice president at Kotak Capital Company, who is advising the Sheths: "It [Gesco] is an asset stripper's dream."

Take out a complimentary trial

Take out a 7 day trial to gain unlimited access to Euromoney.com and Asiamoney.com analysis and receive expertly-curated updates direct to your inbox.

 

Already a user?

Login now

 

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree