n Private entity promoters have to reduce their holding to 75%, govt to 90% in all listed PSUs

With only three months remaining for listed companies to comply with the minimum public shareholding norms, the Indian equity market is staring at R17,200 crore worth of paper to be floated by such entities.

According to Capitaline data, 108 companies are yet to comply with minimum public shareholding requirements under which promoters of private entities have to reduce their holding to 75% by June and the government has to bring down its holding to 90% in all listed PSUs by August.

The data further show that a total of 96 private companies, including 17 MNCs, will have to sell shares worth approximately R13,944 crore within the next three months. The remaining 12 companies are government owned and have until August 2013. The total worth of PSU stake sale is valued at R3,263 crore at the current market prices.

Many privately held companies are contemplating diluting their stake at a steep discount given the market conditions and very little time remaining before the deadline expires. A section of market experts also feels that share price of companies may witness sharp correction once the promoters make stake sale announcements, as seen in the recent past.

?Sebi is not going to extend the deadline… Investors are fully aware how desperate these companies are to bring down their promoter holding. Unless these companies provide steep discount, investors may not participate in share sale auctions,? said a senior official at Mumbai-based investment banking firm.

According to a report by proxy advisory firm InGovern, many companies (Kennametal India, Elantas Beck, among others) that announced their stake sale plans experienced high volatility and significant drop in stock prices in the past few months.

Compared to a drop of 4% and volatility of around 6% in BSE Sensex, shares of companies that recently sold their stake declined between 10% and 50% and have experienced volatility of around 10-30%, stated the InGovern report.

Meanwhile, data show that four companies ? Wipro (78.29%), DLF (78.58%), Adani Enterprises (76.46%), and Adani Ports (77.5%) ? belong to the BSE 100 universe with more than 75% promoter shareholding. Based on the current market rates, the value of promoter stake sale is being pegged at R4,640 crore ? one-third of the total amount to be raised by privately-held companies.

In addition to the aforementioned four companies, six companies in BSE 200 universe ? Jet Airways (80%), Jaypee Infra (83.27%), JSW Energy (76.72%), Oracle Financial Services (80.31%), Sun TV (77%), and Tata Communications (76.15%) ? have to bring their promoter shareholding down to 75%.

The value of stake sale in these six companies is pegged at R1,841 crore.

Share rejig

* As much as R17,200 cr worth of shares to be diluted by companies to comply with shareholding norms

* In all, 108 companies ? 12 public & 96 private ? are yet to comply with the guidelines

* PSUs to dilute shares worth R3,263 cr; value of shares from pvt cos pegged at R13,944 cr

* Private companies have time till June 30 to comply with guidelines

* Deadline for government entities fixed at August 31