Rs 60,000 crore & counting: Large deals climb to record high in August

Large share sales in listed companies have hit top gear this month, even as the markets witness a pullback following five straight months of gains. 

According to calculations done by Business Standard, large block trades worth nearly Rs 60,000 crore (only sell-side turnover) have been executed this month, the highest for any calendar month. This is on the back of two of the largest share sales of 2023 getting executed in August. These are the Rs 7,684 crore share sale by Hulst, an affiliate of Baring Private Equity, in Coforge and the Rs 7,412 crore stake sale in Adani Power by the promoter group to US-based GQG Partners. 

Other large transactions carried out this month include the Rakesh Gangwal family’s 3 per cent stake sale in InterGlobe Aviation for Rs 2,802 crore, China-based Alibaba group firm Antfin’s stake sale worth Rs 2,037 crore in Paytm, and Tiger Global’s 1.44 per cent stake sale in Zomato for Rs 1,124 crore to mark its exit.

The surge in activity comes even as the benchmark Nifty50 has come off by over 3 per cent from its highs on July 20. According to industry players, sustained momentum in the broader market, ample domestic liquidity, and buying support by bulge-bracket global institutions have underpinned the deal momentum. Also, optimism around India’s medium-to-long-term economic and market outlook has pushed investors to sign hefty cheques, even as certain private equity (PE) players or promoters have sought an exit.

“Most of the block deals have happened in non-index stocks. Nifty50 returns do not necessarily reflect what’s happening across the board,” observed Ajay Garg, founder, Equirus. Long-term investors, such as mutual funds, foreign portfolio investors, private equity players, and family offices are not necessarily perturbed by short-term movements, he said.

Though the benchmark indices have given up some gains, the midcap and smallcap gauges have climbed to new highs this month, extending their outperformance. On a year-to-date basis (YTD), the Nifty midcap and smallcap indices are up nearly 23 per cent; the Nifty50 index, on the other hand, has gained just 6.6 per cent.

“The undertone is positive. Though benchmark indices are declining, the trajectory is upward. Overall, factors are positive for India. The flows continue to be positive. There is enough dry powder with institutional investors. That’s why these block deals are getting subscribed,” said Pranjal Srivastava, partner- investment banking, Centrum Capital.

In June as well, shares sold via large blocks exceeded Rs 50,000 crore. Market players said this is a sign that the domestic markets have matured and are seeing participation from a diversified set of investors with different investment time frames and outlooks.

Several counters that saw large block trades, such as Coforge, Zomato and Paytm, not only managed to absorb the selling pressure but also saw follow-up buying in the secondary market leading to share price gains.

Investment bankers said large block trades are a win-win for outgoing investors, as well as those looking to buy large chunks as these can be done without distorting share prices. “The deal momentum seen this month will give confidence to those looking to sell and those wanting to place long-term bets on India,” said an investment banker.