AV Birla Group’s financial services arm Aditya Birla Capital’s shares made their debut on the exchanges today by listing at Rs 250 and soon fell 5% to trade at Rs 237.5 on NSE, in a rare instance of a company getting directly listed without an IPO. The newly-formed Aditya Birla Capital already meets SEBI’s listing requirements of having at least 25% public shareholding, as it had earlier issued shares to the shareholders of its listed parent Grasim Industries Ltd as part of a larger corporate restructuring.
“We are ready to take the next big step in our journey as we list Aditya Birla Capital. All our financial services businesses are coming under one brand– Aditya Birla Capital. A single brand that people of India can trust and relate to for all their money needs,” Ajay Srinivasan, CEO of Aditya Birla Capital said today.
As for how the listing will impact Aditya Birla Capital, Ajay Srinivasan said, “The listing today will unlock value for the shareholders and will provide us a platform to accelerate our already solid growth.”
Aditya Birla Capital Ltd has business interest in life insurance, asset management, private equity, corporate lending, structured finance, general insurance broking, wealth management, equity, currency and commodity broking, online personal finance management, housing finance, pension fund management and health insurance.
Aditya Birla Group said in a statement this week that the IPO-less listing for its financial services business unit is the culmination of the composite scheme of arrangement, under which Aditya Birla Nuvo was merged with Grasim Industries, while its financial services business was spun off into a new company called Aditya Birla Capital. The newly-formed Aditya Birla Capital is now the holding company of the financial services businesses of the Aditya Birla Group.
The listing of ABFS is part of a restructuring the $41 billion conglomerate started earlier this year. Birla decided to merge Aditya Birla Nuvo with Grasim, both of which served as holding companies for the group’s various businesses. Simultaneously, the group decided to spin off Nuvo-owned financial services business as a separate listed entity in an effort to unlock value. According to the scheme of arrangement, Grasim Industries issued its three shares every 10 shares held in Aditya Birla Nuvo.
IPO-less listing is a rare phenomenon in India, save for SMEs and startups wishing to list on the BSE SME exchange. Capital markets regulator SEBI has put in place certain norms for companies which desire to take the direct listing route. Indian rules allow a company to be directly listed without an IPO, just that it has to meet the requirement of minimum 25% public shareholding beforehand.
The company concerned must issue its shares to the shareholders of a listed entity under a scheme of reconstruction or amalgamation, approved by one of the High Courts. In such cases, shares begin trading on the bourses without being preceded by an IPO. Thus, the existing shareholders are free to sell their shares, and public investors are free to buy those shares, in the secondary market itself. Aditya Birla Capital meets this requirement, as the public holds 25.6% of its shares.