Essar Oil delisting: investors to gain as share price doubled in a year; LIC to be big gainer

Investors participating in Essar Oil's delisting offer stand to record an appreciation of over 2.5 times on their investment, with the state-run firm Life Insurance Corporation (LIC) emerging as a big gainer.

Essar Oil's delisting on Wednesday got through a major technical hitch after the markets regulator Securities and Exchange Board of India (Sebi) gave its go-ahead to the stock exchange BSE to accept nearly two crore shares tendered by LIC for the promoters' buyout offer.

The company's delisting offer saw shares getting tendered at a Reverse Book Build discovered price of Rs 262.80 each, which is at about 80% premium to the floor price of Rs 146.05.

The discovered price for the delisting offer marks a huge jump from the share price of Rs 106.45 recorded a year ago, as also from its 52-week low of Rs 98 seen in June this year.

The offer is said to have received total bids for an estimated 10.1 crore shares, as against a requirement for 9.26 crore shares for the offer to succeed.

However, over 1.98 crore shares tendered by LIC had remained 'unconfirmed' on the stock exchange platform till the time of the scheduled closure of the offer at 3.30 pm on Monday.

LIC will garner more than Rs 500 crore for nearly two crore shares tendered by it in the offer, marking a one-year appreciation of about Rs 300 crore.

Essar Oil shares had closed sharply higher at Rs 243.35 at BSE on Monday, a gain of nearly 8.5%.The stock was down more than 1% on Tuesday, but bounced back on Wednesday and was trading nearly 6% higher at Rs 254 in morning trade.

The stock had risen 96% last year, as against a gain of 32% in the benchmark Sensex. This year also, the Essar Oil stock has appreciated by about 97%, as against a decline of over 5% in the Sensex.

Earlier, in the case of Essar Ports' delisting, the promoters had paid Rs 133 per share -- a premium of 42% to the floor price of Rs 93.66 in that case.

The delisting offer of Essar Oil had begun on December 15 and closed on December 21.The promoters had offered to delist the company from local bourses by buying out the non-promoter shareholding of
28.54%. 

On Wednesday, at 1517 hours, the shares of Essar Oil were trading up 5.98% or Rs 14.35 at Rs 254.35 per scrip intraday on the BSE.