FIs to sell Gesco stake after counter offer

“Though we are of the opinion that professional management should run a company and do not wish to disturb a good management, but if we have a better offer for our shares, we will sell in Gesco,” he added. This indirectly means that FIs would sell out if the counter offer is attractive. If the Sheths make a counter offer, the Dalmias can revise their offer price again. The revisions can go on, but investors are likely to benefit from the bargain.

“The financial institutions will take a collective decision on the stake sale as we can negotiate a better price with the bidders. We have been approached by both parties and we are waiting for a better price,” Bajpai said.

“There is no need for us to auction our shareholding at present and we will offer our shares in the same way as any common investor will,” Bajpai added, clearly hinting that FIs are looking for an exit at an attractive price.

It may be recalled that a public announcement was made by ASK Raymond on October 21 on behalf of Rennaisance Estates Ltd and Sanjay Bakshi (a person acting in concert), who together control 10.4 per cent of GESCO’s equity capital, for acquiring via an open offer additional 45 per cent stake in the target company at a price of Rs 27 per share payable in cash.

On Bombay Dyeing-Bajoria controversy, where FIs hold around 30 per cent stake, Bajpai said they are waiting for a formal offer but few parties have approached them to sell out. “We are waiting and watching… any company which is not adding to shareholders’ value will have to go,” he added.

However, in the case of BSES, institutions were against the Ambanis taking management control in the power company but allowed two seats on its board. In the Indian Aluminium (Indal) case, FIs sold part of their stake to Alcan of Canada as its offer price turned out to be better than Agarwal’s Sterlite (which made an open offer for Indal).

After the Bombay Dyeing and Gesco episodes, the stock prices of both these companies, languishing for some time now, have shown a dramatic surge and have come as a blessing for shareholders. A large section of prominent investors have petitioned investment institutions to take a more activist stance now and enhance shareholder value in a number of other companies where stockholder value is low. FIs are being approached by a number of people asking for auctioning off their combined holdings in some companies, to the highest bidder.