HOV Services buoyant @ Rs 163 ~ Economic Times quotes me in today’s edition on the clearly apparent undervaluation of the stake sale in Source HOV at just US $ 95 m to promoter entity…should be worth at least US $ 250 m
Hope better sense of fair play will prevail and the stake sale is passed at a much higher consideration
Even at US $ 95 m, the gross consideration is Rs 580 crs while Market Cap of HOV is just @ Rs 200 crs…The Equity is Rs 12.50 crs (FV Rs 10) =>Rs 464/share deal value proposed…hopefully should be reconsidered to much higher….Company say the Board will decide what to do with the Monies but clearly they should be considering returning a large part to shareholders as special dividend…1000% Dividend that’s Rs 100/share maybe ?
The Buoyancy in HOV should sustain and in fact the share price can gallop up even more smartly if better sense prevails all around and minority shareholders are protected with a better deal value than the US $ 95 m proposed to the promoters entity itself
Had blogged in detail on this recently and that’s how Economic Times probably saw merit in this line of thinking and covered it with my quote
…similar point well made by Economic Times too except it’s Bank Tec that is merging into Source HOV and not the other way round…though ratios are correctly stated where the smaller Bank Tec is valued marginally higher than the much bigger SourceHOV…not looking fair too though the latter carries deb
…Morgan Stanley is mentioned too but their important role has not been shared by the Company in full disclosure especially if they were involved in the Valuation & deal negotiations and how did they arrive to give a financial committment for a new line of Credit of US $ 1.1 Billion to SourceHOV
…also is Citigroup,the largest and majority shareholder of 68%+ in SourceHOV selling too as the article mentions !? if so have they accepted this valuation of PKF Sridhar & Santhanam,the Chartered Accountants of BankTec or on which valuation are they going !?
…because the Indian Listed Company’s notifications to the BSE & NSE on September 30,2014 only states that the deal will be contracted and consummated at the same valuation provided to the majority shareholder !…that’s Citigroup
…the notification also states that SourceHOV will use the new US $ 1.1 Billion refinancing facility…. committed by Morgan Stanley….. for three purposes as below