Hexaware Technologies will be the first company to successfully delist from Indian bourses since December 2018. The company's promoter accepted discovered delisting price of Rs 475 per share.

Share Market Live

NSE

“The acquirer and promoter have accepted the discovered price of Rs 475 per equity share as the final/exit price for delisting offer,” mid-size information technology (IT) services firm Hexaware Technologies said in a public announcement.

Hexaware Technologies Ltd., incorporated in the year 1992, is a midcap company operating in the IT Software sector. The stock has gained 12 percent in one month and 40 percent in 2020.

On June 5, promotor HT Global announced a delisting plan for the company.

HT Global IT Solutions Holdings is the investment arm of Baring Private Equity Asia, which holds a 62 percent stake in Hexaware Technologies. It will need to have close to 91 percent ownership in the company to go ahead with the delisting.

The promoter had said that it would acquire 11.38 crore equity shares, representing 37.92 percent of the total equity of the firm from public shareholders.

All public shareholders who have tendered their equity shares at or below the exit price will be paid a consideration of Rs 475 per share. The last date for payment to all public shareholders whose bid has been accepted is September 30, 2020. Those public shareholders whose bids have been rejected will have their shares returned, the company informed.

"At Rs 475, Hexaware is getting delisted at 20x/18x CY21/22 earnings (our and consensus). We note that peers like LTI, Mindtree, Mphasis, and Coforge are currently trading at 19-23x FY22 P/E multiples, in a similar range to the delisting valuation multiple of Hexaware," Phillip Capital noted in a recent report.

It added that public shareholders typically demanded a premium of 100 percent from the CMP in previous delisting examples. Even in the case of Hexaware, a premium has turned out to be 83 percent as Hexaware had announced the delisting at the market price of Rs 259 in June, it explained.

It notes that the final delisting price is close to the upper end of the

initial expected delisting range of Rs 350-450.

Analysts at ICICI Securities believe those shareholders who have not tendered their shares, or whose bids have been rejected, will be given an opportunity to tender their shares at a delisted price.

“We would recommend that shareholders (who have not tendered their shares or whose bids have been rejected) exit at the current price, which is closer to the delisting price. This is since we believe post-delisting of shares, the process of getting the delisted price (Rs 475/share) will be through the off-market route over the next year. This may become a tedious process. Hence, we recommend that investors exit the stock at the current market price, which is closer to the delisting price,” the brokerage said in a note.

As for the reason of delisting, Phillip Capital believes, in all likelihood, Baring Private Equity Asia (BPEA) has finally found a buyer for its stake in the firm and the buyer wanted to take the company private.

The delisting process was probably a precursor to the much-awaited BPEA exit, and change of ownership, it said adding that it will be interesting to see turns out to be the eventual buyer of Hexaware.

Post the acceptance of Promoter of the discovered price of Rs 475, the brokerage also suspended its price target on the stock, as that has little relevance now.

First Published:Sept 24, 2020 5:50 PM IST