Open offers by listed companies decline 39% to Rs 9,000 cr in Apr-Oct

Listed companies made open offers worth close to Rs 9,000 crore to public shareholders in the first seven months of the current fiscal, a drop of 39 per cent from the year-ago period.

According to Sebi's latest monthly report, a total of 30 open offers for shares worth Rs 8,973 crore were made by the companies during the April-October this financial year (2020-21).

In comparison, 40 offers, amounting to Rs 14,603 crore, were made in the same period preceding fiscal.

Under the Sebi regulations, pursuant to the substantial acquisition of shares or change in control in a listed firm, an acquirer has to make an offer to the public shareholders, known as open offers, to give them a fair opportunity to exit the company.

The open offers are made with the objective of change in control of management, consolidation of holdings and substantial acquisition in a company.

According to the data, during the first seven months of the current fiscal, the highest number of offers (26) worth Rs 8,959 crore was made towards change in control of management.

This was followed by two offers each for consolidation of holdings and substantial acquisition of shares.

In October, six open offers with offer value of Rs 481 crore were made to shareholders, compared to six offers with offer value of Rs 3,010 crore in September.

August saw the maximum number of open offers in value terms at Rs 3,862 crore (nine issues); two offers of 528 crore were received by shareholders in July; and June witnessed four offers worth 1,088 crore.

However, not a single open offer was made in May, while in April, three offers worth Rs 4 crore were made to shareholders.

Securities and Exchange Board of India (Sebi) rules require a mandatory open offer for minority shareholders in the event of any major change in the promoter holding of a listed company, including in the wake of any direct or indirect acquisition of 25 per cent.

Such open offers are required for the acquisition of up to 26 per cent stake from public shareholders.