Others secure, Harry misses in scramble for Spence shares

Monday, 12 March 2012 00:00 - - {{hitsCtrl.values.hits}}

Amidst a mandatory offer for Aitken Spence by Melstacorp, both linked to business tycoon Harry Jayawardena, outside investors are managing to collect quantities in a development which analysts termed a bit bizarre.

For example, last week on Monday three million shares of Spence traded for Rs. 347 million, but Harry had been able to pick up only an insignificant quantity.

Of the three million shares traded, two blocks of 1.6 million and 1.38 million shares each had gone at Rs. 115 per share. The buyer was a foreign fund. Harry’s Melstacorp had secured only around 120,000 shares worth around Rs. 14 million.

On Monday Spence stock hit a high of Rs. 117 and a low of Rs. 113.70 before closing unchanged at Rs. 115.

It is learnt that despite Harry being in the market offering Rs. 115 per Spence share, the stock was sold to foreign funds and others at the same price.

Among sellers last Monday were Employee Provident Fund (EPF), A Z Holdings, Elgin Investments and Abbas Esufally.

Market talk was that EPF, which sold around 1.2 million shares, had maintained a stance that if it was selling, it would only be to foreign funds – a move to bring in much-needed dollar inflows.

However, analysts said the flipside of this was that in the event foreign funds were to exit, it would be at a higher price. If another foreign fund buys it will not be an issue, but local investor buying would result in a higher foreign outflow.

Other analysts said that since Harry was keen to increase his stake in Spence, some investors and brokers are demanding their pound of flesh by quoting prices above Rs. 115, but as evident by Monday’s big transactions, deals eventually had been done at the same price of Harry’s offer. What is currently on is the revised offer as opposed to the original one at near Rs. 113 per Spence share.

On Tuesday Spence stock hit an intra-day high of Rs. 119 before closing at Rs. 116.90, up by Rs. 1.90, but only 54,141 shares were traded.

Though missing shares early in the week, Melstacorp on Thursday purchased 404,124 shares of Spence at Rs. 115 a piece, thereby increasing collective stake along with parties acting in concert to 167.7 million shares or 41.3%.

In the latter part of the previous week Melstacorp bought Rs. 336 million worth of more shares of Spence after picking up a 10.8% stake for Rs. 5 billion earlier on from SLIC.

As per brokers, several institutional investors such as pension funds were also buying though in smaller quantities, perhaps eyeing higher dividend yield or capital appreciation going forward. Among those who sold last week were companies connected to business leader Ravi Thambiayah.