Mahindra Sells Treasury Stock To Canada’s CDPQ; Raises Rs 1,240 Crore
Employees work on the assembly line for Mahindra & Mahindra Ltd. XUV 500 sport utility vehicle at the company’s factory in Chakan, Maharashtra.(Photographer: Kuni Takahashi/Bloomberg)

Mahindra Sells Treasury Stock To Canada’s CDPQ; Raises Rs 1,240 Crore

Shares of Mahindra & Mahindra Ltd. fluctuated between gains and losses today after the automaker sold nearly 1.92 crore shares of the company at Rs 650 apiece in a block deal to Canadian pension fund CDPQ, raising over Rs 1,240 crore, according to Bloomberg.

“Since the Benefit Trust holds M&M shares for the benefit of its shareholders, it has decided to monetise part of the holding by divesting to a long-term, high-quality investor,” VS Parthasarathy, chief financial officer of the Mahindra Group, was quoted as saying in an exchange filing.

The M&M Benefit Trust was created in July 2008 for the exclusive benefit of Mahindra & Mahindra Ltd. and holds nearly 10.36 crore shares called the treasury stock—the outcome of various mergers and amalgamation. Proceeds from the stake sale is transferred to M&M to be used for operational requirements.

This is the first investment by CDPQ in the Mahindra Group reposing their faith in the future prospects of the company and Indian economy, Parthasarathy said.

The company—which had a cash and bank balance of over Rs 3,730 crore as on March—is yet to clarify the need to raise Rs 1,240 crore. Queries emailed to Mahindra & Mahindra seeking clarity remained unanswered. Bharat Doshi and Arun Nanda, the benefit trust’s trustees, declined to comment.

The trust’s stake in the company, which was 8.77 percent prior to the block deal, fell by nearly 1.6 percent. The promoter group stake, comprising that of Mahindra Benefit Trust, dropped by around 1.6 percent to 20.44 percent .

Mahindra hopes to spend nearly Rs 18,000 crore in the next three years in its automobile and tractor segments in capital expenditure as it transitions into BS-VI emissions standards by the year-end. It has also entered into a partnership with Ford Motor Co. to co-develop a mid-size sports utility vehicle for India and emerging markets.

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