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Rally prompts promoters to sell treasury stock

This article was posted on Sep 24, 2009 and is filed under Stock News

Suzlon, Cipla, JP Associates raise Rs 2,540 cr in block deals. Taking advantage of the rally in the domestic stock market, the promoters of Suzlon Energy, Cipla and Jaiprakash Associates today offloaded parts of their treasury stake in the open market to cumulatively generate Rs 2,540 crore.

The sale of treasury shares by these promoters comes close on the heels of the country’s top private sector company, Reliance Industries (RIL), selling 15 million of such stocks in block deals on September 17.

The Sensex and the Nifty are now trading near their 16 month highs. While both the benchmarks have gained over 75 per cent so far in 2009, promoters of domestic firms have raised around Rs 75,000 crore through share sales this year, with most of it coming in the past six months.

The Tulsi Tanti family, promoters of Suzlon Energy, the world’s fifth-largest wind turbine maker, offloaded around 70 million shares of their holding, representing 4.5 per cent of their total stake in the company, for about Rs 678 crore at Rs 96.85 per share. The shares were sold by Suzlon Chairman and Managing Director Tulsi Tanti’s daughter Nidhi T Tanti and brother Girish R Tanti. After the sale, the total promoter group shareholding in the company has come down to about 53.08 per cent. Suzlon had initially planned to sell about 50 million shares, but raised the offer to 70 million.

The promoters resorted to stake sale to support the operational expenses of the cash-starved company, which is sitting on a debt of close to Rs 12,000 crore, said sources. The share of Suzlon closed the day today at Rs 94.65, registering a decline of 6.10 per cent on the Bombay Stock Exchange (BSE).

“The share sale by the promoters of domestic blue-chip firms is likely to continue for the next few months. While this will put some extra pressure on the secondary market in the short run, since supply for shares will be more than the demand, stability will return as the next quarter results of companies are likely to be robust,” said Debanjana Chatterjee, senior research analyst tracking company fund flows at Mumbai-based Centrum Capital. Construction firm Jaiprakash Associates raised Rs 1,190 crore by selling around 45.4 million shares in block deals today. The deals were priced in the range of Rs 239.75 to Rs 244.80 a share. The company’s shares closed the day down 6.34 per cent at Rs 234.15 on BSE.

Drug maker Cipla raised around Rs 672 crore by selling shares to institutional investors at Rs 263.75 a piece. The share price of Cipla fell 1.55 per cent to close at Rs 259.80 on BSE.

source: Business-Standard

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