Soon after the announcement of L&T’s open offer for 31 percent stake in Mindtree, a section of the investors’ community has complained to the Securities and Exchange Board of India (Sebi), fanning the flames of discord between L&T and Mindtree promoters on the proposed transaction. CNBC-TV18 has learnt that a section of the domestic investors has complained to the market regulator about the conduct of Nalanda Capital and has charged it with acting in concert with the promoters of Mindtree.

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In a fresh round of charges, minority shareholders of L&T have asked if Nalanda Capital is acting in concert with the Mindtree promoters and a few other investors. If so, their combined shareholding as persons acting in concert (PAC) certainly exceeds the regulatory threshold of 25 percent (as per regulations 3(1) and 4 of SAST regulations) which obliges them to make an open offer, or in this case a competing offer to L&T’s open offer as that got announced first.

According to sources, minority shareholders of L&T, mostly mutual funds, may have urged Sebi “to investigate and take appropriate action against the people involved in this violation of rules meant to safeguard the interest of minority shareholders.”

Mindtree has proposed an astronomical dividend pay-out of Rs 24/share this year, which is much higher than their dividend payout in past many years. This will erode the company of almost half its cash reserves at a time when another company is in the process of acquiring it and their open offer price factors in the cash component as part of the valuation. This may also lure the shareholders to hold on to the stock and not tender shares in the open offer as the record date for the dividend is early July, after the open offer date of June 17 to June 28.

Those investors who are keen to hold the shares to earn the dividend must note a few important points that experts point out: “Mindtree share price is at

Rs 980/share level due to the open offer price and may correct after the process is over and also point out that the dividend adjusted price will see a further correction from the present levels.”

Nalanda Capital did not comment to a CNBC-TV18 query while responses from L&T and Mindtree are awaited.

The AGM in which shareholders will vote on dividend is after the record date for the dividend and open offer which may also mean that L&T can oppose the dividend considering it is the single largest shareholder in Mindtree and would have gained more stake in the open offer. Currently L&T owns 29 percent stake in Mindtree.

The war between Mindtree promoters and L&T started when VG Siddhartha sold his 20 percent stake in the IT firm much to the dislike of the promoters of Mindtree. A lot was spoken by both the sides in the media and now the war it seems is being fought engaging the minority shareholders.

First Published:Jun 10, 2019 8:12 PM IST