Adani Group acquires 29.18% stake in NDTV and Open offer for additional acquisition of 26%

Indian billionaire Adani Group has acquired a 29.18% stake in media company NDTV (New Delhi Television Limited), but Adani owns this stake indirectly in NDTV. NDTV is one of India’s leading news channels which operates many national channels like NDTV India, NDTV 24×7 and the company also runs an online news website.

Indian billionaire Gautam Adani addresses delegates during the Business Summit in Kolkata
Indian billionaire Gautam Adani (MeelBijendra/Agrika)

In 2009 NDTV founder Radhika Roy and Prannoy Roy’s own company, RRPR Holding Pvt Ltd took a loan of Rs 403 crore from VCPL (Vishvapradhan Commercial Private Limited) Company. The loan was interest-free but convertible warrants were issued to VCPL in lieu of the loan and these warrants could be converted at any time and VCPL could take a 99.5% stake in RRPR Holding Private Limited. RRPR Holding Pvt Ltd held a 29.18% stake in NDTV Company.

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AMG Media Network Limited (AMNL), a subsidiary of Adani Group, on Tuesday acquired a 100% stake in VCPL (Vishvapradhan Commercial Private Limited) in a deal worth Rs 103 crore. Due to non-payment of the loan given by VCPL to RRPR Holding Private Limited on time, VCPL exercised its right of warrant and held 99.5% stake in RRPR Holding Private Limited. RRPR held a 29.18% stake in NDTV, now indirectly owned by Adani Group through VCPL.

Shortly after the Adani Group announced the acquisition of a 29.18% stake in the company, NDTV said that the Adani Group has executed the deal without any negotiation, notice or consent from NDTV’s management and founders Radhika Roy and Prannoy Roy. NDTV further said that the company was not aware of the deal between Adani and VCPL.

Notice has been given to RRPR to transfer all its equity shares to VCPL within two days. But on 25 August 2022, NDTV said that their promoters Radhika Roy and Prannoy Roy were barred by the Indian Capital Markets Regulator SEBI on 27 November 2020 from buying or selling directly or indirectly in the securities market for a period of 2 years. Due to this, Radhika Roy and Prannoy Roy cannot transact in any kind of securities market for two years, and for this prior approval from SEBI will have to be taken.

In the SEBI (Securities and Exchange Board of India) scrutiny, NDTV promoters Prannoy Roy and Radhika Roy had violated insider trading rules that led to Roy being banned from the securities market for two years, the ban will be lifted on November 26, 2022. Further, the market regulator in its order dated November 27, 2020, had directed the promoters to disgorge the amount of illegal profits of Rs 16,97,38,335 with interest at the rate of 6% per annum from April 17, 2008 till the date of actual payment.

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According to the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations 2011, If someone acquires a 25% or more stake in a company then he/she will have to make an open offer in the market and offer to buy at least a 26% additional stake from existing shareholders. Under SEBI regulations, VCPL (Indirectly AMNL and Adani Enterprises Ltd) made an open offer for the additional acquisition of 1,67,62,530 fully paid-up equity shares at Rs 294 per share (worth Rs 4,928,183,820), constituting 26% of the share capital, from the public shareholders of NDTV.

The open offer price of Rs 294 per share is at a considerable discount from NDTV’s current market price. For the last two days, the share price of NDTV rose to Rs 427.95 on NSE and for two consecutive days, the stock is closing in the upper circuit of 5% daily.

If this open offer is successful, Adani Group will have a 55.18% stake in NDTV and will become the majority shareholder of the company.

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Shareholding Pattern in NDTV

NDTV founder Radhika Roy holds 16.32% and Prannoy Roy 15.94% stake in NDTV company, so both promoters hold a total of 32.26% stake privately. Apart from holding 32.26% privately, the promoters of the company (Radhika Roy and Prannoy Roy) through RRPR Holding Pvt Ltd held an additional 29.18% stake in NDTV company. So thus Radhika Roy and Prannoy Roy both individually and through RRPR Holding Pvt Ltd held a total of 61.44% stake in NDTV Company.

Source: NSE

As of June 2022 data, there are two large foreign institutional investors in NDTV in which LTS Investment Fund Limited holds a 9.75% stake, and Vikasa India EIF I Fund holds a 4.42% stake.

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