31 buyback offers worth Rs 4,426 cr closed in FY14: Report

Indian firms bought back shares worth over Rs 4,400 crore from public through in 2013-14, achieving just 78% of the target.

According to a report by Prime Database, 31 buyback offers were concluded in 2013-14 with a total acquired sum of Rs 4,426 crore, while the amount on offer was Rs 5,704 crore.

The largest buyback completed was by state-run NHPC for Rs 2,368 crore.

Out of 31 buyback offers, 24 were through the stock exchange route, while the rest were via the tender offer.

In comparison, as many as 26 buyback offers were completed in 2012-13 with a total acquired amount of Rs 4,746 crore. The companies had targeted to repurchase shares to the tune of Rs 12,532 crore during the period.

Buyback involves purchase of outstanding public shares by a firm to reduce the number of shares in the market, leading to increase in promoter holding and improving earnings per share for the future period.

Shareholders can participate either through the tender offer route or by selling shares in the open market.

In an open market offer, firms can buy shares from shareholders without knowing the buyer, while tender offer involves the company writing to its shareholders individually to know their willingness for sale of shares in the buyback.

In terms of buyback offers which opened in 2013-14, there were 32 such offers in the past financial year offering to buy shares worth Rs 11,380 crore.

Out of 32 share repurchase programme, 23 of these offers have closed till now and the amount targeted to raise through these 23 offers was Rs 5,274 crore and the acquired sum was Rs 4,267 crore.

Moreover, nine offers are still presently open, the largest of which is the Cairn India buyback offer for Rs 5,725 crore.

The nine whose offers are still open would have to complete their buyback plans within a period of six months from date of opening their offer and it would also be mandatory for these firms to repurchase at least 50% of the offers, under the new norms issued by the market regulator Sebi in August, 2013.

In addition, 15 delisting offers to the tune of Rs 1,211 crore were made in 2013-14, of which 12 offers worth Rs 1,170 crore were successful, while for the remaining three the status is still unknown.

Delisting is considered successful if acquirers manage to raise their holding to 90% in a firm.