Foreign investors are hoisting stakes in their Indian arms in order to manage their operations more independently. However, such moves may prove expensive and time consuming and could increase exposure to regulatory rumbles. Nandini Lakshman reports from Mumbai
For over a decade, Swedish drug maker AstraZeneca Pharmaceuticals has been planning to delist its Indian subsidiary. On 3 March, AstraZeneca India, in which the Swedish company holds a 75% stake, finally stated in a stock exchange filing that its parent wanted to initiate a voluntary delisting process in India. The company’s step to go private is in sync with the current wave of multinationals which are tightening their grip on their Indian subsidiaries.
Since last year, global companies have been queuing once again outside the offices of the Foreign Investment Promotion Board (FIPB) to seek permission for a stake increase in their Indian arms. Nestlé, Colgate-Palmolive, Procter & Gamble and Suzuki are said to be in the queue while Unilever, GlaxoSmithKline, McGraw Hill Financial and many more have already lifted stakes in their Indian companies.
This move, say market analysts, could be a precursor to many foreign companies wanting to delist from the Indian stock exchanges. Companies have used open offers, share buybacks, and have even opted to delist their Indian subsidiaries from the stock exchanges after mopping up the entire stake held by public shareholders and financial institutions.
According to Hong Kong-based deal tracker Dealogic, 25 foreign companies spent a little over US$5 billion to increase their holdings and acquire assets in their Indian subsidiaries in 2013. The first two months of 2014 have already seen four companies shell out US$1.7 billion to push up stakes in their Indian arms.
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