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    GMM Pfaudler OFS attracts mutual funds, US money managers

    Synopsis

    GMM Pfaudler had enjoyed a dream run and had rallied 184 per cent since the end of 2019, up to the OFS announcement that came in earlier this week.

    GMM Pfaudler’s managing director Tarak Patel

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    MUMBAI: GMM Pfaudler’s offer for sale (OFS) has attracted strong institutional interest, managing director Tarak Patel told investors in a conference call, as he attempted to soothe sentiments in light of the sharp plunge in the stock's price.

    “We have a very very strong shareholder roster. We had about 3-4 top money managers from the US. We have a very strong institutional investor base from India—top 3-5 mutual funds as well,” Patel told investors on Friday. “These people will not come in unless they have done all their due diligence,” he added.

    GMM Pfaudler (GMM), which is a market leader in the niche segment of glass lined (GL) equipment, has been in focus this week, after the company set the floor price at Rs 3,500 apiece, at a steep 33 per cent discount to the the price at that time.

    The stock had enjoyed a dream run and had rallied 184 per cent since the end of 2019, up to the OFS announcement that came in earlier this week. It hit lower limits for next four sessions, eroding nearly 27 per cent in value, and currently trades at Rs 3,803.60.

    Patel said around 18 per cent of the shares offered under the OFS were from private equity player Deutsche Beteiligungs AG (DBAG), which owns Pfaudler Inc. Post the OFS, DBAG will own 32.68 per cent, while Patel family which sold 2.32 per cent, will own 22.24 per cent in the company.

    Patel assured that the promoters will not dilute further holdings over the next three years.

    “We as a family are part of the long-term business. We do want to emerge as a dominant promoter. We will also look to increase the stock, close to 30 per cent after the three-year period,” said adding that DBAG may look to monetize further value after the three year-period.

    He acknowledged there was a lot of backlash to the steep pricing of the OFS, but said it was a process of price discovery.

    “Going forward there will be stability. We have bought in people, we have changed free floats. There comes a time in a company’s life cycle where we have to open it up for new investors,” said Patel. He also hinted that the company may consider rewarding shareholders through options including bonus shares in the future.

    “We always would like to reward our longstanding shareholders. At the right time, we will definitely reward the shareholders either through bonus (shares) or some kind of mechanism, which is going to be EPS accretive for all shareholders,” he told investors.

    Meanwhile data from the securities lending and borrowing segment pointed that someone privy to the information may have indulged in insider trading and made a good profit while shorting the stock.

    In the case of GMM, it was observed that from September 15-21, nearly 1.9 lakh shares were borrowed at a very high lending rate. The historical archives of GMM show that its shares were earlier never lent to such an extent.

    “We are bringing in high quality investors. Our conscience is clear. We are willing to help any agency that would like to check,” Patel said on the SLB data findings.
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    4 Comments on this Story

    Prabhakar Iyer27 days ago
    Nothing wrong with the Fundamentals of the Company.I expect the Share price,to stabilise around OFS offer price,before resuming its upward journey.It has a 50% Market Share in Glass linend Eqiupment sector.
    Ram Niwas28 days ago
    It would be good price for new investors
    Rajoo Gupta28 days ago
    Retail investors are feeling cheated.
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