Nilekani family trust likely to make 3.7x returns in Divgi IPO Nandan Nilekani family-backed auto component company, Divgi TorqTransfer Systems (DTTS), will come up with the first initial public offer of this year. The Pune-based company’s Rs 412 crore IPO will open on March 1 in the price band of Rs 560-590 per equity share of face value of Rs 5 each. The offer closes on March 3. Bids can be made for a minimum of 25 equity shares and in multiples of 25 equity shares thereafter. Nilekani has invested in the company through their NRJN Family Trust, which owns 8.70% shareholding of the company. The Nilekani family trust would be selling up to 1.4 million shares of Divgi TorqTransfer in this offer for sale. The average cost of acquisition of these shares for the trust was Rs 125.28, which will yield 3.5x to 3.7x returns. They own a total of 2.4 million shares. Also read: Higher for Longer narrative keeps the dollar bid; strength in greenback could push USDINR towards 83 The IPO comprises a fresh issue of equity shares aggregating up to Rs 180 crore of fresh issue and an offer for sale of up to 3.9 million shares of Rs 232.12 crore. The company proposes to utilise the proceeds of the fresh issue towards funding capital expenditure for its manufacturing facilities and general corporate purposes. Also read: Warren Buffett calls repurchase critics economic illiterate; 4 reasons why he finds value in share buybacks Jitendra Divgi, managing director, Divgi TorqTransfer Systems, said companies like theirs was a contributor to the India story and the company remained fully confident to sail through the market with its IPO despite prevailing market conditions. Divgi TorqTransfer Systems is a supplier of torque transfer systems, transmission systems, synchronizers and components to automotive OEMs and is the largest supplier of transfer case systems to passenger vehicle manufacturers in India. It is also the only player manufacturing and exporting transfer cases to global OEMs and the only domestic manufacturer of torque couplers and dual-clutch transmission solutions.
The Japanese pharma major is also filing a plea before the Delhi HC seeking appointment of forensic auditors to analyse transactions involving IHH, Fortis Healthcare and RHT, Singapore, as directed by the HC on October 18.
The development is likely to create legal hurdles and delay the proposed open offer as IHH had recently told FE that it could only go ahead if Sebi agreed with its legal interpretation that the SC’s September 22 order has lifted all such restraints.
IHH managing director and CEO Kelvin Loh told FE on November 9 that the company would like to go ahead with the open offer “as soon as possible” as there has already been a delay of four years. Ravi Rajagopal, chairman of Fortis Healthcare, had added that their legal counsel has advised that the company can go ahead with the open offer as the SC order has disposed of various appeals, including the suo motu contempt. “We have represented to the Sebi and the matter is with them,” Rajagopal had said.
However, legal observers told FE that the matter is not that straightforward and simple as the Delhi HC has to take the final call on the matter of open offer as well as whether a forensic audit has to be done in the share sale which was executed in 2018.
Also Read: IHH to float open offer for Fortis if Sebi concurs with our legal view: MD & CEO
Loh and Rajagopal had said the possibility that the matter may take a different turn when it comes up in Delhi HC cannot be ruled out.
IHH had in July 2018 acquired a 31% stake in Fortis Healthcare for Rs 4,000 crore through the bidding route. It had also earmarked Rs 3,000 crore to make an open offer for an additional 26% to the public shareholders as required under the law.
Daiichi has written to Sebi that the SC in its September 22 order had asked the HC to consider ordering a forensic audit into the dilution of FHL shareholding, repeated violation of undertakings and assurance by former FHL promoters — Malvinder and Shivinder Singh — and the transaction between FHL, IHH and the clandestine transfer of Rs 4,666 crore to RHT Singapore.
Daiichi is “severely prejudiced” with IHH’s clandestine attempt to subvert the status quo order directed by the SC on December 14, 2018, and September 22 with respect to the conduct of forensic audit and the pending proceedings before the HC by purportedly consulting regulatory authorities, including Sebi, on the proposed FHL-IHH transaction. It has reiterated that the FHL-IHH transaction was currently sub-judice before the HC where FHL is also a party, its solicitors, P&A Law Offices, have said in the letter.
“We further state that any such attempt by FHL and/or IHH to proceed with the FHH-IHH transaction would be in direct contravention of the HC and SC orders,” the letter sent by the law firm has stated. Daiichi Sankyo is pursuing the enforcement of Rs 3,500-crore arbitration award against the Singh brothers pronounced by a Singapore tribunal for concealing information when they sold Ranbaxy Laboratories to it for $4.6 billion in 2008. The apex court had in 2018 put on hold the sale of Fortis Healthcare to IHH on a contempt plea filed by the Japanese drugmaker against the Singh brothers.