Hard choice for promoters of stressed businesses: Sell stake or cash out

Promoters are assessing potential future areas of stress in their businesses and deciding to give up majority stakes rather THAN go to the IBC

Surajeet Das Gupta Peerzada Abrar & Dev Chatterjee  |  New Delhi/Bengaluru/Mumbai 

Call it the great Indian promoter sell-off, one where a number of Indian industrialists are under pressure to either dilute their stakes or simply cash out. They know the consequences of hanging on in their current situations could be disastrous.

Lenders could go to the National Company Law Appellate Tribunal (NCLAT), in which case the promoters would lose everything — money, equity, and control. Or, lenders could panic and sell the shares pledged to them by the promoter (as in the case of Zee). This would not only lead to a drastic fall in the company’s market cap, but ...

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First Published: Tue, March 05 2019. 01:43 IST