This post is dedicated to all those readers who take huge risk in the name of speculation on probable de-listing of MNCs trading at high valuations, thus clearly positioning themselves to be unlucky.
As per the minimum public shareholding norms, all the listed private sector companies are mandated to bring down and maintain public shareholding at 25% under the new guidelines by 3rd Jun’13.
Since the deadline is only 12 months ahead, the stock prices of many listed MNCs with promoter holding in excess of 75% had surged during the last 3-4 months in anticipation of de-listing and were quoting at insane valuations.
Fresenius Kabi Oncology (FKO) was one of the above case with Parent company, Fresenius Kabi (Singapore) Pte Ltd. (“FKSL”) holding 90% stake and thus investors were hopeful of de-listing offer by the Promoters. Recently, FKO announced on exchanges about a letter from promoters notifying the company of its intentions to sell its 15% equity in the company.
Thus, against investors (who were rather sitting on a bomb ready to explode) expectation of de-listing offer, promoters triggered the bomb by notifying the company of its intention to bring down its holding below 75% and thus comply with minimum public shareholding norms. And, as far as stock price is concerned, its already exploded with a correction of ~40% in just about 1.5 months.
I hope all those speculating on de-listing of MNCs will probably be more cautious and not pre-empt, especially when valuations are exorbitant.
Ekansh Mittal [email@example.com]