Promoters cash out over Rs 87,000 crore in H1CY24 amid market boom

Analysts say this year's sell-downs by promoters as well as private equity (PE) firms were underpinned by a 'benign exit environment' and were across sectors

Promoters sold shares worth over Rs 87,000 crore in the first six months of 2024, capitalising on the market boom and attractive valuations.

According to an analysis by Kotak Institutional Equities (KIE), promoters of 37 companies from the top 500 universe sold cumulative stakes worth Rs 87,400 crore. This figure is only 12 per cent lower than the Rs 99,600 crore raised by promoters through equity share sales last calendar year, a record-setting period.

Analysts attribute this year’s sell-downs by promoters and private equity (PE) firms to a “benign exit environment” that spanned multiple sectors.

“We attribute various reasons to the acceleration in promoter (non-PE) sales, but note that the current bullish market conditions would not be a primary consideration for most promoters given the long-term investment horizon of promoters. The key considerations include business expansion; compliance with minimum public shareholding norms (example: Mankind); debt reduction (Vedanta); promoter family holding adjustments and personal considerations (Cipla and M&M) and strategic realignment of the interests of promoters (Bharti Airtel and Indus Towers),” said KIE in a note.

The Nifty50 rose 10.6 per cent during the first half of 2024, the steepest in three years. Meanwhile, the broad-based midcap and smallcap indices surged more than 20 per cent each.

Prominent exits by promoters included a Rs 15,300 crore share sale in Indus Tower by Vodafone Plc, a Rs 10,200 crore share sale by the promoters of InterGlobe, and a Rs 9,300 crore share sale by the Tata group in Tata Consultancy Services.

In addition, sales by PE firms amounted to Rs 39,300 crore ($4.7 billion) during the first half of the year. PE firms also divested stakes through initial public offerings (IPOs).

“PEs have used bullish secondary market conditions to sell their stakes, either in full or in part, which is entirely logical for them, given the limited period and nature of their investment mandates. We would note that offer for sale amounts have significantly exceeded fresh capital issuance amounts in the past few years,” KIE noted.

Significant PE exits in 2024 included a Rs 1,900 crore share sale by Westbridge Crossover Fund in IndiaMART InterMESH, a Rs 1,000 crore stake sale by Asia Opportunities and General Atlantic Singapore Fund in PNB Housing Finance, and an Rs 850 crore stake sale by Westbridge in AU Small Finance Bank.

The large promoter sell-downs have led to a sharp decline in promoter holdings. According to the KIE report, private promoter holding in the BSE-200 index had declined to 38.8 per cent in the March 2024 quarter, from 42.1 per cent at the end of December 2022 quarter. The holdings could have slipped further during the June 2024 quarter, the data for which is still awaited.

Fast track

Amount mobilised during first half of 2024 was only 12% lower than full-year 2023, which was a record year

Calendar year	Size (Rs cr)
2019	24,100
2020	52,700
2021	37,800
2022	41,200
2023	99,600
2024*	87,400

Source: Kotak Institutional Equities report; Note: *Up to June 30