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FIs to skip CDC offer for Punjab Tractors
Debjoy Sengupta, Kausik Datta in Kolkata |
August 02, 2003 11:39 IST
The open offer by CDC Capital Partners for a 20 per cent additional stake in Punjab Tractors Ltd is likely to turn out to be a damp squib with financial institutions, which hold around 46 per cent collectively, not very keen on participating in the offer.
Life Insurance Corporation of India managing director R N Bharadwaj said LIC was not very keen on participating in the open offer at the price of Rs 153 per share, the rate at which the fund purchased the Punjab government's stake in the tractor company.
LIC's stance of the open offer gains significance as it holds the largest equity exposure of 16.24 per cent in the company. Others, namely Unit Trust of India, IDBI and General Insurance Corporation of India are likely to follow LIC.
"There isn't much difference between the average cost of LIC's acquisition of shares in PTL and the price at which CDC purchased the Punjab government's 23 per cent stake. Therefore, we intend to keep away from the offer," Bharadwaj explained.
The managing director, however, said that the price of offer was declared very recently and LIC was yet to do an internal valuation of the price that will suit the life insurance major.
"The equity research cell at LIC will be engaged soon to do an internal valuation on the price, but the price of Rs 153 looks very low for us," Bharadwaj explained.
"We will also discuss the issue with other FIs and will take a final decision," he added.
UTI, which holds 13.91 per cent in PTL, said the mutual fund major was yet to take a decision on subscription of the CDC open offer.
"CDC has announced its intention to go for the 20 per cent mandatory offer yesterday. We will take some time to study the pros and cons of the offer," said a top official of UTI.
The PTL stock has been gaining momentum ever since the Punjab State Government had put its 23.4 per cent stake up for sale.
The stock reached the level of Rs 170 days before the closure of the price bid from the level of Rs 120 in March.
Stock market experts said the offer price of Rs 153 was likely to elicit good response from the retail shareholders as well.
"The PTL stock did not go down much from Rs 158, the closing price of the share at the day when CDC acquired the Punjab government's stake. Going by the fact that CDC will picking up only 20 per cent from 75 per cent available in the market, the PTL share should go below Rs 100. But it did not happen. The share is hovering at Rs 140. This shows that retail shareholders are not also interested in the offer," a fund manager said.