Marathon NextGen Realty on Monday filed a draft letter of offer to repurchase shares worth Rs 149.52 crore. The company is planning to repurchase 54.37 lakh shares at a price of Rs 275 a piece. The offer represents 19.12% of the total paid-up share capital of the company. The offer at Rs 275 is 17.6% less than its closing price of Rs 334 on Monday on the Bombay Stock Exchange (BSE). ICICI Securities is the manager to the buyback. The promoters hold 75% stake in the company as of March 2017.
The government’s dependence on the coffers of cash-rich PSUs to meet its divestment target and the new additional dividend tax regime are attributed as the reasons behind this trend. Of the Rs 46,246.58 crore raised by the government through disinvestment in FY17, Rs 18,963.47 crore came via buybacks.
Buybacks have also become the preferred route over dividends, as dividend income in the hands of all residents, domestic companies, trusts or funds except those established for religious, educational or charitable purposes, attracts an additional dividend tax of 10% on the dividend income of over Rs 10 lakh a year. A total of 49 companies came with share repurchase offers in FY17, worth Rs 34,648 crore, the highest in close to two decades.