Delisting offers down to a trickle as Bulls rule Street
With bulls scaling new peaks, delisting offers are at their lowest level in at least 14 years.
Delisting, which means permanent removal of securities of a listed firm from a bourse, gives investors an opportunity to exit shares trading at low valuations.
According to data, the calendar year 2017 saw just four delisting offers worth Rs 19.99 crore compared to seven offers worth Rs 373 crore in 2016. These numbers seem minuscule as compared to the last few years when thousands of crores worth delisting offers flooded D-Street.
With Sensex trading at around 34000 amid lofty valuations, clearly, promoters don’t want to buy out public stake by paying minority shareholders a significant premium.
A delisting is a reverse of an initial public offering (IPO). Delistings gain popularity among the promoters when the investors are willing to invest at high valuations.
Delistings become popular with promoters when the investors are willing to sell at low valuations. With stocks trading at multi-year highs in many cases, potential delisting offer prices at present will be 70-100% of the stock prices a year ago.
A company can voluntarily ask to be delisted to become privately traded. Otherwise, a particular stock may be removed from a bourse because the company is …read more