Emami Stake Sale Said To Be Aimed At Gaining Investor Confidence
The Emami Stake sale was necessitated due to sudden sharp erosion in stock value, says a member of the promoter family.
The promoters’ decision to sell 10 percent stake in Emami Ltd. was aimed at infusing confidence among investors, a member of Emami Group’s promoter family said on condition of anonymity.
This round of 10 percent divestment was not desired and not planned. But this was necessitated due to a sudden sharp erosion in stock value. Promoters decided to sell stake to infuse confidence among the investors, the person said. Promoters can always raise stake in the future once the current storm settles. Company is already exploring all options, including strategic divestment, initial public offering or exit in group assets in 6-8 months, the person added.
The Emami stake sale, the second since February, has helped promoters raise Rs 1,230 crore to reduce debt. Promoters lost over Rs 350 crore compared to the last round of stake sale when the promoter family raised Rs 1,600 crore for same 10 percent.
Promoter shareholding in Emami Ltd. now stands at 52.73 percent.
The promoters aim to pare Emami Group’s Rs 2,200 crore debt in six months’ time and are exploring several divestment options for the same.
Emami has already engaged merchant bankers for divestment in Emami Paper Mills Ltd. and AMRI Hospitals while an Emami Cements IPO is in the works. The group also has land parcels internally valued at about Rs 4,500 crore. Emami Group holds 98 percent in AMRI Hospitals and 74.9 percent in Emami Paper Mills.
On Tuesday, Emami Ltd. shares rose 8.79 percent to Rs 290.80 apiece on the BSE while the benchmark Sensex gained 0.79 percent to end the day at 39,434.94 points.