Indian companies may delay share sales worth about 400 billion rupees ($7.6 billion) after a government official said the regulator plans to extend a deadline for owners to trim their holdings amid a market slump.
The benchmark Sensitive Index (SENSEX)’s 12 percent decline in the past year makes it difficult for companies to sell shares, according to the official, who declined to be identified citing rules. A new date has yet to be decided, the official said.
Prime Minister Manmohan Singh’s government in June 2010 ordered founders of private companies to reduce their holding to at least 75 percent by June 2013, and state-run companies by August next year. The requirement would have prompted firms including Bharat Heavy Electricals Ltd. (BHEL), India’s biggest maker of power equipment, and Wipro Ltd. (WPRO), chaired by billionaire Azim Premji, to sell about 400 billion rupees of stock, U.K. Sinha, chairman of the market regulator said on April 13.
“The government’s intention is to help state companies struggling to offload shares,” said R.K. Gupta, the New Delhi- based managing director of Taurus Asset Management Ltd., which oversees $1 billion of assets. “Companies planning to delist will get more time.”
Astrazeneca Pharma India Ltd. (ASTR) sank 6.2 percent to 2,073 rupees at 10:40 a.m. in Mumbai, the worst performer on the BSE Mid-cap Index. Wyeth Ltd. (WYH) lost 2.5 percent. Blue Dart Express Ltd. (BDE) fell 2.8 percent to 2,032 rupees, paring the year-to-date gain to 29 percent.
Astrazeneca has surged 70 percent this year and Wyeth reached a four-month high on April 17 on speculation the owners may take the companies private to avoid having to reduce stake, said Kishor Ostwal, managing director of CNI Research Ltd. (CNIR)
About 180 private companies will have to sell 270 billion rupees of shares, while 16 state-owned firms will offer 120 billion rupees of stock, Sebi’s Sinha said.
The government raised 139 billion rupees selling stakes in state companies in the year ended March, missing a 400-billion rupee target, amid a 25 percent decline in the Sensex in 2011.
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