look news india
Ahmedabad: Leading global private equity (PE) firms and promoters managed to pull out over $2 billion before the stock market crashed due to surprise election results. D.T. Between May 15 and May 31, 14 companies signed block deals worth over $50 million (Rs 420 crore). These deals were mainly done by PE funds and promoters.
The selling happened amid a boom in the market on hopes that the BJP led by Prime Minister Narendra Modi will get a clear majority in the Lok Sabha elections. On May 27, the Sensex crossed the 76,000 mark for the first time.
Exit polls indicated that the BJP-led National Democratic Alliance (NDA) would win two-thirds of the 543 seats. But when the BJP failed to cross the majority mark on June 4, share prices fell. Due to which block deal activities were also stopped.
Investment banking sector sources said there were concerns about volatility in the weeks leading up to the election and the market was quite volatile at that time. PE firms and promoters took advantage of the situation and reduced their stakes.
The market was at an all-time high and promoters and PE firms were looking to sell their stake. People may have decided to sell before the elections so that they could get the best price.
Companies in which promoter entities reduced their stakes include pharmaceutical company Cipla (a deal worth over Rs 2,725 crore), road developer IRB Infrastructure Developers (Rs 1,445 crore) and TeamCan India (Rs 1,253 crore). The buyers in most of the transactions were mainly domestic mutual funds, insurance companies and foreign portfolio investors such as pension funds and sovereign wealth funds.
