SBG open offer for IL&FS Engineering nears approval

The Saudi BinLaden Group (SBG), which is keen on
increasing its stake in IL&FS Engineering and Construction Co Ltd (formerly Maytas Infra), is still waiting for a formal go-ahead from the Securities Exchange and Control Board of India (Sebi) for an open offer.

The company’s application for the open offer is said to be stuck for certain clarifications.

“There were some clarifications sought by the Sebi and the lead manager to the open offer is in the process of getting the application cleared by the regulator. We hope to get a formal approval sometimes this week,” a source in IL&FS Engineering told DNA.

“There are certain sensitive issues involved in this matter, delaying the process,” the source said.

SBG has been waiting for the regulator’s nod for over eight months now. SBG Projects, a group company, was earlier allowed to acquire 20% stake in the scam-hit company. Once the open offer goes through, SBG would be the largest shareholder followed by IL&FS, which took over the erstwhile Maytas on directions from the Company Law Board.

Maytas Infra was a company founded by the founder of B Ramalinga Raju and his immediate family members. Raju’s elder son Teja Raju was at the helm of affairs at Maytas till the accounting fraud at Satyam came to light in January 2009.

Subsequently, the scam at the then fourth-largest IT company caused collateral damage to Maytas as well bringing in a major management turmoil.

The government took over the management of Maytas as well along with Satyam and handed over the reins to IL&FS, which had significant exposure to Maytas through the pledging of shares with it by the promoters of the company.

Interestingly, a similar attempt by the current majority stakeholder in the company - IL&FS - did not yield the desired result. IL&FS’s attempt to garner an additional 20% stake from the shareholders in addition to its 37% stake through the open offer failed to excite the shareholders owing to pricing issues.

Though the analysts tracking the developments this time around are not willing to hazard a guess on the fate of the SBG’s open offer, the negative trend in IL&FS Engineering’s market price is said to be offering a ray of hope.

“The disparity between the offer price by IL&FS and the price in the market ensured that IL&FS does not get good response for its open offer. This time, though there is no way we can predict the market direction, there has been a negative trend on the price in the bourses,” a Hyderabad-based analyst tracking the developments said.

According to him, the open offer price of SBG would be between Rs195 and Rs200. The stock closed at Rs179 per share on the Bombay Stock Exchange on Monday, down 0.64% from the Friday close.