MNCs on a stake selling spree in India to generate cash, reduce financial burden

livemint.com:

BENGALURU : Bengaluru: Multinational companies (MNCs) have been selling stakes in their Indian businesses citing high market valuations to use the proceeds for a host of purposes including debt repayment. Over the last month, Conagra Brands announced the sale of its controlling stake in India’s Agro Tech Foods (ATFL), long-time investor British American Tobacco (BAT) indicated it would sell a partial stake in ITC while Japan's Sumitomo Wiring Systems sold 4.4% stake in Samvardhana Motherson International.

"Acceptability of Indian stock as a liquid currency has also grown manifold—while 5-7 years ago many MNCs explored delisting as a viable option, the vibrant Indian markets today provide a significant value unlocking opportunity for these MNCs, through listing their India businesses," said Gaurav Sood, managing director and head of Equity Capital Markets, Avendus Capital. To further break it down, Conagra sold its stake to Convergent Finance LLP and private equity firm Samara Capital, who will jointly acquire a 51.8% stake in Agro Tech Foods Ltd for $78 million or ₹650 crore.

Meanwhile, ITC’s largest shareholder BAT planned to offload a part of its stake in the conglomerate as it aims to improve "balance sheet flexibility" to monetise some of its holding and "reallocate some capital," BAT said in a release last month. Its shareholding in ITC decreased to 29.02% in 2023 from 29.19% in 2022.

Japan's Sumitomo Wiring Systems' (SWS) sale of stake in Samvardhana Motherson will fetch the company about ₹3,633 crore, according to media reports. Last year, the company sold 3.4% stake in Samvardhana, citing a global deleveraging strategy to fund partial debt prepayment of SWS group in the rising interest environment.