FY25 marks among the least ever spends on taking companies private

Acquisition amount at less than Rs 100 crore

Acquirers have seldom spent as little on delisting attempts as they have during the previous financial year.

 

The total amount spent on delistings in financial year 2024-25 (FY25) is at a five-year low of Rs 70.98 crore, according to numbers from tracker Prime Database. It has been lower only twice before. It had touched Rs 58.39 crore in FY20 and Rs 46.77 crore in FY17.  

 

This comes after the acquired amount for delisting purposes touched a peak of ₹4,676 crore in FY21 during the pandemic volatility.

 

A number of promoters had announced delisting amid a market rout following Covid-19 amid record low valuations.

 

The BSE Sensex had touched a low of 27,590.95 on April 3, 2020. The benchmark index was above 82,000 in May even after correcting from its all-time high of 85,978.25 which it touched in September 2024. 

 

The Securities and Exchange Board of India (Sebi) had notified new regulations, which allow delisting at a fixed price so long as it is at a 15 per cent premium to the floor price in September 2024.

 

The floor price is the minimum price at which shares are to be acquired.

 

The floor price can depend on factors, including the value of the company’s assets and the share price over the previous six months or a year. There have been 11 delisting offers during last financial year. Delisting offers can fail for reasons such as the minimum number of shares not being tendered or the acquirer rejecting the price discovered during the delisting process.

 

FY25’s trend may reflect a shift in market dynamics which made delisting more common, according to experts.

 

“Predominantly, the delisting phenomenon was multinational company (MNC)-driven. Most MNCs historically did not want minority shareholding anywhere,” said Mehul Savla, partner at boutique investment bank RippleWave Equity Advisors.

 

Many companies were forced to list and sell stakes following the passing of the Foreign Exchange Regulation Act (FERA) in 1973. 

 

Restrictions were eased in the post-liberalisation era, which led to a number of multinational companies buying up shares and delisting from the Indian stock markets. This led to a spate of delistings.

 

The rise in valuations in recent years has led to a reversal of this long-running trend.

 

Companies like Whirlpool have chosen to sell their existing stake rather than buy out Indian shareholders.

 

A combination of high valuations, larger scale of local operations as well as a need by many MNCs to meet cash requirements have contributed towards the change, said Savla.  

 

“Delisting era is over as of now,” he said. 

 

"Conceptually, you see more delistings during bearish times,” said Pranav Haldea, managing director at Prime Database.

 

Companies can offer public shareholders an exit if they feel that valuations during a downturn are below the company's intrinsic value.

 

Other firms may choose to go private to avoid quarterly scrutiny of performance which can potentially inhibit long-term plans.

 

The public markets in India, in the last few years, have offered tremendous valuations, also in part due to the liquidity, thus eliminating the need to go private.

 

Getting listed is the flavour of the season rather than delisting and this is likely to continue, according to Haldea.

 

In a sign of the times, Hexaware Technologies which delisted from the bourses in 2020, relisted in February 2025.