Share sales in listed companies have gathered momentum with the markets hitting fresh record highs. According to a report by Business Standard, in June so far, transactions worth ₹26,152 crore have already been executed via block deals and more such deals are in the offing.
Some of the large block deals in June are Canada Pension Plan Investment Board’s (CPPIB) 1.66 percent stake sale in Kotak Mahindra Bank for ₹6,124 crore, UK-based investment firm Abrdn’s share sale in HDFC Asset Management Company and HDFC Life Insurance Company (for a total of ₹6,148 crore), and US-based private equity TPG Capital’s divestment worth ₹1,390 crore in Shriram Finance, informed BS.
“Resurgence in FPI flows into domestic funds (especially small- and mid-cap funds), and sustained valuations are the prime drivers. The block market in India has been quite resilient through the various market cycles over the past few years, and we expect this trend to continue,” Subhrajit Roy, MD & head, global capital markets, BofA Securities, was quoted as saying.
The report further noted that the block deals activity took a beating in April as the markets came off nearly 10 percent from their highs, however, with the markets once again regaining their mojo, private equity firms and promoters have been able to cash out.
Experts told BS that a vibrant block deal market is a sign of deepening capital markets.
“Over the past decade, private equity players have placed good faith and billions of dollars every year in Indian firms. Many of these block deals are driven by the need for PE firms to exit. Their capital needs to be recycled and they must fulfill that mandate,” Ajay Garg, founder, Equirus Capital, told BS.
According to industry players, the up-move in the markets has turned valuations attractive, which is helping PE investors generate good returns on their investments, said the report.
“The block deal momentum will continue for some time as the appetite and liquidity are strong. Some private equity investors have redemption pressure; they want to exit their investments or want liquidity from their older investments,” Pranjal Srivastava, partner-ECM, Centrum Capital, was quoted as saying in the report.
