GSK Pharma, select MNC stocks gain as Sebi eases delisting norm

In intra-day trade, GSK Pharma gained as much as 12% and ended 6.4% higher at Rs 3,347.45

The GlaxoSmithKline Pharma-ceuticals stock rallied 12 per cent in intra-day trade on Friday, before closing at Rs 3,347.45, up 6.4 per cent, on hope the Indian arm of Britain’s GlaxoSmithKline might consider going private, following the removal of an irritant in delisting regulations.

At a board meeting on Thursday, the Securities and Exchange Board of India (Sebi) had relaxed the mandatory requirement of the participation of at least 25 per cent public shareholders. It said companies might not have to meet this requirement if they were able to show all shareholders had been contacted.

On Friday, GSK Pharma gained the most among the stocks of multinational companies (MNCs). Other select MNC stocks, including FAG Bearings, Kansai Nerolac, Grindwell Norton and Siemens, gained about three per cent each, outperforming the benchmark Sensex, which closed 0.94 per cent higher.

Experts say Sebi’s relaxation gives more leverage to companies and bankers to pursue delisting plains. “No company was coming forward to delist, as the 25 per cent rule was a big hurdle. Now, we will see companies with high promoter holdings consider going private,” said an investment banker.

He added the market was more enthused about GSK Pharma, as the company had recently seen a successful share repurchase programme. Parent GSK’s $1-billion voluntary open offer last year had seen widespread participation from investors. Through the open offer, the GSK group had acquired 24.33 per cent stake, raising promoter holding in the company to 75 per cent, the most a promoter can own in a listed company.

Market players said companies and investors would await the details of the changes to the delisting framework.