The Adani Group’s power arm, Adani Power has announced the appointment of Vivro Financial Services as the merchant banker to evaluate its proposal of delisting its equity shares from BSE and NSE. The Company has informed that after the receipt of the due diligence report from the merchant banker, the board will again meet to discuss the delisting proposal in detail. The proposal to buy out the company’s public float has come from promoter firm Adani Properties Pvt. Ltd. In the delisting proposal, Adani Properties had expressed its intention either by itself or together with other members of the Promoter Group as the case may be to acquire all the equity shares of the Company, each equity share having face value of Rs 10 held by the public shareholders of the company.  The promoter group collectively holds 74.97 percent of the paid-up equity share capital.  Public shareholders hold 25.03 percent in of the paid-up equity share capital.

What this means

Several Indian companies are considering going private as stock valuations remain depressed. In the last 12 months, Adani Power’s share price has halved from a high of ₹73.75 to the current level of ₹37.95, making delisting by the promoter group an attractive and affordable option. With the delisting promoters seek the freedom to restructure their businesses outside the scrutiny of public shareholders and regulators. It could also be seen as a strategic move to reward shareholders and have better control over the company. While depressed valuations might be an attractive reason for the promoter to take the company private, the move might not be the best from the point of view of minority shareholders. Vedanta’s delisting earlier has not been received positively in the market as shareholders feel that the price offered is not reflective of the true value of the company.