Mallya cashes in on UB Holding share rally

Sold 8.84% stake for around Rs 55 based on the company's average stock price during the September quarter

Even in bad times, Vijay Mallya has managed to make a neat cash pile for himself by selling a part of his in United Breweries Holding Ltd (UBHL), which enjoyed a dream run on the stock exchanges between June and September this year.

UBHL is a holding company for Mallya's other firms United Spirits Ltd (USL) and Kingfisher Airlines (KFA).

The share price of UBHL saw a three-fold rise from a 52-week low of Rs 53 in June to touch a high of Rs 155 in September, on the Bombay Stock Exchange (BSE). Between July and September, Mallya through his three firms -- Mallya Pvt. Ltd, Kamsco Industries and Gem Investment and Trading Pvt Ltd. -- sold 8.84% stake in UBHL that gave him around Rs 55 crore based on the company's average stock price during the September  quarter .

As per September quarter shareholding, the promoter holding in UBHL led by Mallya was down from 51.5% to 43.09%.

Mallya and his companies have been in the news for varied reasons. Take the case of United Spirits, the share price of which saw a near four-fold rally from a low Rs 450 in January to touch a high of Rs 1,424 on October 23. The rise in share price was fuelled by rumours of global spirits major Diageo looking to buy a stake in USL.
The market regulator had also sought information from United Spirits after the stock surged following reports about Diageo-USL deal. The Securities and Exchange Board of India had also started investigations into the reasons for the volatile stock price movemnets at UB group companies.

UBHL holds 18.03% stake in USL and would have been the chief beneficiary had Mallya managed to clinch a deal with Diageo. But research firms like Macquarie and CNI Global had already cautioned investors against betting too high on USL as the risk-reward was unfavourable after the rally in share price.

The timing of the share sale by promoter firms of UBHL could not have come at a better time. In June, the auditors of UBHL had raised concerns over its significant exposure to debt-ridden KFA, as also on delays and defaults related to tax dues and repayments to lenders.

Still, the stake of institutional shareholders in the company has gone up from 3.37% at the beginning of this year to 24.8% in June. While LIC’s shareholding has remained unchanged at 1.17% in UBHL during this period, Birla Sun Life Trustee Company, Platinum Investment Management, ACACIA Banyan Partners and LKP Finance are the players who have picked up majority of stake in the company.