Baring to take Hexaware private, accepts exit price of Rs 475 per share

The private equity major may have to spend as much as Rs 5,400 crore to buy out the entire 37.9 per cent stake from public shareholders

Mid-size IT firm Hexaware Technologies will soon go private. Promoter Baring Private Equity Asia has accepted the exit price of Rs 475 per share discovered through the reserve book building (RBB) process. 

The private equity major may have to spend as much as Rs 5,400 crore to buy the entire 37.9 per cent stake from public shareholders. The price discovered through the RBB process has come in at a premium of nearly 67 per cent to the floor price of Rs 285 per share set by the company.

Market observers said this is the first high-profile delisting since that of Polaris Consulting in 2018.

In the past two years, delisting attempts in companies, such as INEOS Styrolution and Linde India, had fallen through after their promoters rejected the price discovered through the RBB process. However, in the case of INEOS Styrolution and Linde India, the discovered prices were 2.3x and 4.7x the indicative price given by the promoters, respectively.

According to PRIME Database, there hasn’t been a single successful delisting worth more than Rs 100 crore since 2019.

Experts said a delisting bid can be successful if public shareholders remain realistic in their expectations.

For any delisting bid to be successful, the promoter needs to acquire at least 90 per cent shareholding. Currently, Baring holds a 62.3 per cent stake in Hexaware. To take its shareholding past the 90-per cent mark, it had to acquire at least 27.6 per cent, or 82.7 million shares, from public shareholders.

In a public notice, Hexaware has said it will acquire 87.29 million shares tendered at or below the exit price in the RBB process. It said after this acquisition, the shareholding of the promoter group shall be 91.16 per cent, which will exceed the minimum number of equity shares required for delisting to be successful.

The company said the payment to shareholders who have successfully tendered their shares will be made by September 30.

Shares of Hexaware ended at Rs 468, up 1.6 per cent on Wednesday.

Investors whose bids have got rejected in the RBB will also get an opportunity to offer their shares to the company at Rs 475 apiece. Hexaware is expected to announce the share tendering process for such investors in due course.

ICICI Securities in a note said public shareholders would be better off tendering all their shares, instead of holding on to shares of an unlisted firm. “We believe after delisting of shares, the process of getting the delisted price (Rs 475 per share) will be through the off-market route over the next year. This may become a tedious process. Hence, we recommend that investors exit the stock at the current market price, which is closer to the delisting price,” the brokerage said.