Murugappa to sell stake in CIFCL

K. T. Jagannathan

CHENNAI: The Murugappa group has re-worked its formula for dilution of its stake in Cholamandalam Investment and Finance Company Ltd. (CIFCL) to facilitate the entry of DBS Bank of Singapore.

This follows the current guidelines on takeover by the Securities and Exchange Board of India. The current norms have brought down the cut-off holding for promoters to raise their stake.

The cut-off holding was brought down from 75 per cent to 55 per cent. The Murugappa group, it is now learnt, will dilute 17-18 per cent stake in the company. The group — mainly through Tube Investments (TI),owns 55 per cent equity in Chomandalam.

When the alliance was announced some time ago, it was made clear that TI would sell its 15.10 per cent stake first followed by a preferential offer to DBS and an open offer to the public.

Now , the Murugappa group is planning to offload 17-18 per cent to the Singapore bank.This is expected to help DBS to have an equal 37.5 per cent stake in the company (post-open offer to the public).