Rajandran R Creator of OpenAlgo - OpenSource Algo Trading framework for Indian Traders. Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Building Algo Platforms, Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in

Things you need to know about Vedanta Delisting

1 min read

On 12th May 2020, Vedanta India came up with a delisting offer priced at ₹87.5 per equity share. Ahead of the announcement, the company’s shares soared 9.45% on the NSE, crossing the proposed delisting price of ₹87.5.

What is Delisting of Shares?

Delisting is the permanent removal of the company’s shares trading in a public stock exchange and the company becomes a private company. It is also known as the “reverse book building process” since it’s a reverse procedure of listing.

Share holding of Vedanta

The promoter group, including Vedanta Resources, owns 50.13% of Vedanta Ltd, while the remaining 49.48% is held by public shareholders(General Public, Mutual Funds, Banks, Institutions, and GDRs).

Holder’s NameNo of Shares% Share Holding
No of Shares3717196639100%
Promoters1606560%
Foreign Institutions56421874715.18%
Banks & Mutual Funds40552647110.91%
Others2962733747.97%
General Public2803449507.54%
Financial Institutions2928360487.88%
Foreign Promoter186345813250.13%
GDR143782610.39%

Indicative offer price

Indicative offer price set by vedanta is Rs 87.5/- per share. Indicative offer price is to influence the public shareholders to make them accept the offer. However, no public shareholders has no obligation to accept the price.

Sebi regulations provide scope for only three kinds of price

Floor price – which acquirers at the minimum price are committed to accept under the reverse book-building process. The promoter needs to open an escrow account and deposit the amount of consideration based on floor price & a number of equity shares outstanding with public shareholders.

Discovered price – the price at which the maximum number of bids are received

Exit price and Final price – which the acquirer is willing to pay to shareholders for delisting a company. Exit Price and Final Price is not necessarily the indicative price from the promoters.

The company does not set the eventual delisting price. It is the investor who sets it. While investors can quote the price they want, the acquirer has the freedom to accept or reject it.

It is a high risk game to trade the delisting shares. If the promoter is not willing to accept the higher prices he/she might withdrew the offer and in such cases stock might end up collapsing.

What is the Motive of Delisting Vedanta?

Vedanta’s delisting, according to the group, aids its corporate simplification process and provides it with “enhanced operational and financial flexibility in a capital intensive business”.

Vedanta India parent Vedanta PLC was listed in London in 2000s . Went private in 2018 after many controversies.

Going forward it’s going to be extremely tough for promoters to delist as Domestic Institutions might disagree with the current indicative pricing offered by the promoters.

Rajandran R Creator of OpenAlgo - OpenSource Algo Trading framework for Indian Traders. Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Building Algo Platforms, Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in

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