India's largest utility vehicle major Mahindra & Mahindra on Thursday said its board has approved divestment of up to 8.1% stake in Mahindra Holidays & Resorts India Ltd (MHRIL).
The move is meant to bring down the promoter's stake in MHRIL to the mandatory limit of 75%, the company said in a statement to the Bombay Stock Exchange (BSE) on Thursday.
M&M, the promoters of MHRIL, holds 83.1% stake in the company. "The move is primarily to comply with the statutory requirement for listed companies to reach a minimum threshold of 25% public shareholding," the statement said.
"The sale of this stock will be done in various tranches and will be completed before June 2013. The first tranche may happen in the near-term," the statement said.
MHRIL's stock rose 4.7% to Rs 333 on the BSE, outperforming the Sensex, following news of the stake sale.
MHRIL's market capitalisation is estimated to be Rs 2806 crore. At the current market price, the promoters will earn R227 crore through the sale.
"We plan to divest 8.1% of MHRIL's equity share capital in small lots over the next 16 months through the market," said Udhay Phadke, president, legal and financial, M&M.
"In addition to meeting the statutory requirement, this sale will significantly improve the float of MHRIL shares in the market," he said.