Automotive major Mahindra & Mahindra (M&M) will sell 8.09 per cent stake in its hospitality venture Mahindra Holidays & Resorts India Ltd to meet the minimum public shareholding norms for a listed firm in India. Mahindra Holidays, which owns Club Mahindra Holidays resorts and is backed by the private equity firm Jacob Ballas, went public two years ago.
The Listing Agreement and the Securities Contracts (Regulation) Rules, 1957, require that existing firms listed on the Indian bourses, with less than 25 per cent public shareholding (and thereby, over 75 per cent promoter group holding), should reach the minimum threshold of 25 per cent within a period of three years from the date of commencement of the Securities Contracts (Regulation) (Amendment) Rules, 2010, i.e., by June 2013.
M&M currently owns 83.09 per cent of Mahindra Holidays and its board has approved divestment of up to 8.09 per cent of its stake in the hospitality firm through one or more tranches, to be completed by June 2013.
Uday Phadke, President Finance & Legal at M&M said that the firm will divest stake in small lots over the next 16 months through the market. The first tranche will be complete in the near term.
As per the latest traded price, M&M’s 8.09 per cent stake is valued at Rs 225 crore or $47 million.
Mahindra Holidays was one of the first large initial public offers floated in India after the stock markets bottomed out in early 2009, following a year of heavy battering due to the global financial crisis.
The firm had raised Rs 120 crore through a pre-IPO placement to SBI and Jacob Ballas in January 2008, in a transaction that valued the company around Rs 4,000 crore. Its IPO raised around Rs 258 crore at a price of Rs 300 a share, over 30 per cent less than the price at which it sold its shares to Jacob Ballas.
Mahindra Holidays scrip was up 3.79 per cent at Rs 330.25 in mid-day trade on the BSE on Thursday after the stake sale plan was announced by its parent firm.
Jacob Ballas held 1.39 per cent stake in Mahindra Holidays as of June 30 through NYLIM Jacob Ballas Asset Management Company III LLC A/c.