The pace of promoters selling stakes in their companies picked up in the first half of 2024, with deals worth $10.5 billion by the promoters of 37 companies on the NSE500, according to data by Kotak Institutional Equities.
In 2023, Indian promoters sold stakes worth $12.4 billion, and if the current pace continues this year it will easily surpass the last year’s figures.
Last year, stake sales by Adani group promoter entities boosted the overall figure.
In 2024, the selling spread across sectors and the reasons for the sales range from business expansion, debt reduction to meeting minimum public shareholding norms. In the case of sale by non-promoter private equity firms, it has been tactical.
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Promoters of Mankind Pharma, for instance, sold stake to meet minimum public stake norms, Vedanta’s promoter sold stake to reduce debt, Cipla and Mahindra & Mahindra’s promoters sold stake for personal considerations and family holding adjustments, while in the case of Bharti Airtel and Indus Towers, it was for strategic realignment of the interest of promoters, Kotak said in its analysis.
The stake sales have whittled down promoter shareholding of companies and according to Kotak’s analysis, promoter holdings in the companies in the BSE-200 index has slipped to 38.8 per cent at the end of March from 42.1 per cent at the end of December 2022.
Domestic investors have been large buyers in Indian equities and their stake grew by 80 basis points to 23.5 per cent in the same period. In that time frame holding by foreign portfolio investors has slipped to 20.5 per cent from 21.4 per cent.
Data on the stock exchanges has revealed that domestic mutual funds have been buyers in the case of bulk and block deals, grabbing what has been offloaded either by promoters or PEs.