InvestorQ : Was LIC justified in asking for such a high price for the Vedanta delisting? What about shareholders who wanted to get out of the stock?
vaishnavi mhatre made post

Was LIC justified in asking for such a high price for the Vedanta delisting? What about shareholders who wanted to get out of the stock?

Answer
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vidhya Laxmi answered.
5 days ago


In the last few days, there has been a school of thought that LIC may have been unreasonable in demanding as high a price as Rs.320. In the process, they may have also denied others the opportunity to exit their positions in Vedanta.

That may not necessarily be the case. Firstly, the price went up as high as Rs.150 and any retail investor who really wanted to exit would have exited at that point of time. So that argument does not hold really much water.

You must not forget that LIC had a point in sticking to its price of Rs.320. It would have perhaps adjusted a bit if the Agarwal family had made a counter offer. But that was not the case. If you look at it logically, a successful delisting would have given promoters a free run.

There is no reason for the Indian market to allow companies to raise capital, list in the bourses, acquire PSU cash cows and then delist at the bottom of the cycle without paying a decent price to shareholders? LIC actually said what other investors could not say.

LIC raised this pertinent question in the midst of the delisting. The problem in India is that mutual funds and FPIs have traditionally been passive investors. Proxy firms in India still do not have the clout that their US counterparts have enjoyed and are more advisory in nature.

India also does not have very influential individual investors like Carl Icahn, Abigail Johnson or Ray Dalios who routinely pick up the phone and drive home their point to managements. It falls upon LIC to make the point and they have been bang on target. LIC needs to be appreciated for preventing this action.