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On the last trading day of the week i.e. Friday, a big and surprising deal can be seen in the stock market. According to exclusive information received by CNBC-TV18 from sources, the size of the block deal in logistics and tech company ‘Shadowfax’ has suddenly been increased significantly. Under the initial plan, there was a preparation to sell 9.08 percent stake in the company, which has now been directly increased to 14.20 percent. There is a possibility of buying and selling of shares worth about Rs 1,640 crore in the market through this giant block deal, which can have a direct impact on the movement of this stock today.
Floor price fixed at huge discount, may put pressure on investors
The floor price fixed for this block deal is a big surprise for investors. The deal has been finalized at a floor price of Rs 197 per share, which is about 9.87 percent or about Rs 21.58 per share cheaper than Shadowfax’s closing price of Rs 218.58 on BSE in the last trading session i.e. Thursday. Market experts believe that when such a large quantity of shares will be available at a discount of about 10 percent from the market closing price, there may be pressure on the share prices as soon as the market opens today. If we look at this entire deal, approximately 8.3 crore shares can be exchanged as per the floor price.
Flipkart and old investors will sell stake, the company will not get a single rupee
The most important thing about this block deal is that it is a ‘secondary transaction’, that is, the company i.e. Shadowfax is not issuing new shares in it. Instead, early and old investors of the company are selling their stakes. According to preliminary broker documents, Walmart-owned Flipkart Internet, Eight Roads Ventures and Korean fund IMM India Fund can sell their shares in this mega-deal. This simply means that about Rs 1,640 crore received from this deal will not go into the corporate account of Shadowfax, but this amount will go into the pockets of old investors who sold shares. However, according to the report, even after the deal, these big investors may retain some of their stake in the company.
The price is still much above the IPO price, what will be the things to keep an eye on next?
Even though today there is a possibility of pressure on the stock due to discount, but if compared with its IPO price, the picture still looks strong. The upper price band of Shadowfax’s IPO was Rs 124 per share, against which the floor price of Rs 197 is still about 59 percent profit. Although the stock slipped a bit during listing, it later made a spectacular comeback. In today’s business, the main focus of investors and traders will be on who are the real buyers of this block deal, how much of the shares are finalized in the deal and how much stake is left with the big investors after the deal.