The curious case of Adani-NDTV open offer

The open offer by Adani Group, which opened on November 22, has seen 39.35 lakh shares being tendered till Friday even as offer price of Rs 294 is significantly lower than the market price of nearly Rs 387.

Why do people come to the stock markets? Why does one invest in stocks even though there are much safer investment instruments available that also offer the added benefit of assured returns?

To make money, of course. To be more precise, make more money compared to the relatively safer avenues.

Then, isn’t it surprising to see someone ready to sell shares at a certain price, even though the same set of shares can be conveniently sold at a much higher price. To be specific, someone is ready to sell shares of New Delhi Television Limited (NDTV) at Rs 294 even though the shares can be easily sold at Rs 387 in the open market.

Simply put, someone is ready to forego an additional assured profit of nearly 32 per cent by tendering the shares in the open offer rather than selling in the open market.

So, who exactly is tendering the shares in the open offer?

Market participants say it is quite common for potential acquirers to involve “friendly entities” before initiating the move to acquire a company so that they can be assured of a sizeable stake in case of any eventualities.

“Logically, market price and open offer price indicates the shareholder should sell shares in the market rather than tender in the open offer. However, it is noticed that many a times friendly intermediaries accumulate stock on behalf of interested parties. Such stock is then offered in open offers even at a price disadvantage,” says Arun Kejriwal of Kejriwal Research & Investment Services.

The list of shareholders of NDTV include little-known names like Confirm Realbuild, Adesh Broking House, Grid Securities and Drolia Agencies that own more than one per cent each while their cumulative holding is pegged at 7.13 per cent or nearly 46 lakh equity shares.

Interestingly, only Drolia Agencies and Adesh Broking House have been holding shares of NDTV for one year while the other two entities are relatively newer entrants.

Further, as per the latest shareholding structure of NDTV, a total of 11 foreign portfolio investors (FPIs) hold a cumulative stake of 14.72 per cent in the company. More importantly, LTS Investment Fund, which has a stake in other Adani Group entities, holds 9.75 per cent stake or 62.85 lakh shares in NDTV.

Then, there remains the larger question on the future of the listed firm with both Adanis and Roys – Prannoy Roy and wife Radhika Roy – holding a significant stake in the company. Founders Prannoy and Radhika directly hold 15.94 per cent and 16.32 per cent, respectively in NDTV.

That, in a nutshell, is the curious case of the open offer by Adani Group that is looking to acquire further shares of NDTV after indirectly acquiring a stake of 29.18 per cent in the media company.

It did so by acquiring the shares of Vishvapradhan Commercial Private Limited, which, in turn, acquired the shares held by RRPR Holding Private Limited, a promoter group company of NDTV.  Business Today