Sammaan Capital Share Price Falls After IHC’s Acquisition Bid: A Detailed Analysis
Sammaan Capital Ltd. share price fell nearly 5% during early trade on Friday amid high trading volume after key corporate updates. This significant development has sent ripples through the Indian stock market, with investors scrambling to understand the implications of this acquisition bid.
What is the Acquisition Bid?
Avenir Investment RSC, an affiliate of Abu Dhabi-based International Holding Company (IHC), has agreed to purchase a 43.46% stake in Sammaan Capital for nearly $1 billion (Rs 8,850 crore). This investment will see IHC emerge as the new promoter of Sammaan Capital, marking a significant shift in the company’s ownership structure.
How Will This Affect Existing Shareholders?
The deal will lead to significant equity dilution for existing shareholders, from 98.25% to 57.74%. This means that the current book value of Rs 243.6 per share will go down to Rs 200.5 after the fundraise. Post-preferential allotment, in which it will invest Rs 8,850 crore, Avenir will hold over 63 crore shares in the company, representing 43.46% of the holding.
What is the Investment Structure?
As per the agreement, 33 crore shares of the company will be issued to the investor at Rs 139 apiece, an 18% discount to the last closing price, in order to raise Rs 4,587 crore. The rest will be raised through two tranches of warrants. The company will subscribe to 8.60 lakh warrants at the same price, with each carrying a right to subscribe to one equity share, which will help raise another Rs 1,207 crore, while another Rs 3,055 crore will be raised through the issue of 21.97 crore of similar warrants.
What are the Regulatory Implications?
This investment will trigger an open offer as per the regulatory guidelines to acquire an additional 26%. The total traded volume so far in the day stood at 8.2 times its 30-day average with a turnover of Rs 545 crore. The relative strength index was at 69.
How Has the Stock Performed?
Sammaan Capital share price fell 4.9% intraday to Rs 161.35 apiece. The benchmark NSE Nifty 50 was down 0.3%. The stock has risen 1.6% in the last 12 months and 7% on a year-to-date basis.
What Does This Mean for Indian Investors?
Indian investors are advised to exercise caution and carefully evaluate the implications of this acquisition bid on their investments. The significant equity dilution and change in ownership structure may have a bearing on the company’s future performance and growth prospects.
Conclusion
In conclusion, the acquisition bid by IHC’s affiliate Avenir Investment RSC has significant implications for Sammaan Capital and its investors. As the Indian stock market continues to evolve, it is essential for investors to stay informed and up-to-date on the latest developments and their potential impact on their investments.
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