HomeBUSINESSCan Adani secure control of NDTV?

Can Adani secure control of NDTV?

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On Tuesday, Adani Group announced that it is acquiring 29.18% of NDTV, which promptly decried the move as one without “discussion, consent or notice”. At 29.18%, Adani becomes the single largest shareholder after founders Radhika Roy and Prannoy Roy, who cumulatively hold 32.26%.

As required by law, Adani will be making an open offer since India’s securities law requires anyone acquiring more than 25% of a company (in addition to other conditionalities) to make an open offer to acquire another 26% of the shares of the company. This is to offer minority shareholders an opportunity to exit as a new shareholder could now exercise control in the company.

Adani has indirectly acquired these shares from Vishvapradhan Commercial Pvt. Ltd (VCPL), the owner of convertible debentures (warrants that provide for the conversion of debt to equity) in RRPR Holding Pvt. Ltd that, in turn, owned 29.18% of NDTV Ltd.

Nature of Adani’s control in NDTV

The nature of the acquisition virtually accords Adani veto rights over key decisions of the company. Strategic decisions such as fundraising, expansion plans and remuneration to key management are determined by special resolutions that require approval of 75% of shareholders. Any party that owns more than 25% in a company effectively has a veto over such decisions.

To secure majority control of NDTV, Adani group needs to secure control of an additional 21.82% equity stake, which would take their holding to 51%, or secure support of other shareholders to vote in favour of their resolutions.

Will investors side with Adani?

But there is a foreign portfolio investor (FPI) who can potentially aid Adani’s quest for control of NDTV.

LTS Investment Fund, a Mauritius-based fund, holds 9.75% in NDTV. It is the single largest public shareholder.

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The major chunk of LTS’s holdings is in four Adani Group companies—Adani Power (1.1%), Adani Transmission (1.6%), Adani Enterprises (1.7%) and Adani Total Gas (1.3%). The investor, of whom little is publicly known, also owns stakes in other Indian companies.

While LTS owns shares in 13 publicly listed companies worth 18,995 crore, the bulk of its holdings is of Adani Group companies—worth 18,571.8 crore, amounting to 97.73% of total holdings, according to Trendlyne.

If LTS decides to tender its entire holding during the open offer, then Adani could end up holding 38.93% in NDTV, at which point Adani would come closer to securing management control on its own.

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