Tuesday, March 18, 2008

Bear Stearns liquidates Rs 900cr Indian equities

The Indian outfit of US's fifth largest investment bank, Bear Stearns, on Monday began liquidating its holdings in India, triggering fears of a further plunge in the stock prices of mid-cap companies held by it. Bear Stearns Mauritius Ltd (BSMA), the Indian arm of the beleagured bank, has liquidated Rs 667.47 crore worth of shares, as Indian markets plummetted by 951 points on Monday on the heels of the global meltdown.

Even on Friday, BSMA had sold off Rs 265.61 crore worth shares through negotiated deals on the Indian bourses. Majority of the holdings have been liquidated either by transferring of its holdings through P-note accounts or through negotiated deals.

JP Morgan said it would acquire Bear Stearns for $236.2 million, a paltry $2 a share in a deal that represents a shocking collapse for one of the world's largest investment banks. The buyout was aimed at averting a bankruptcy and a spreading crisis of confidence in the global financial system sparked by problems in the US subprime mortgage market.

On Monday, BSMA liquidated its holdings in companies like JSW Steel, Monnet Ispat, KS Oils, MIC Electronics, Northgate Technologies, S Kumars Nation, Usha Martin, SRIE Infrastructure, Bhagyanagar India, Adhunik Metals, GTL, Orchid Chemicals, Madhucon Project, Lakshmi Energy, DS Kulkarni, Aptech, Opto Circuits and Megasoft.

Morgan Stanley, Deutsche Securities and Merrill Lynch Capital Markets and Templeton India were the major buyers of these holdings. Last Thursday, BSMA had sold off its holdings in HEG, Rain Commodities, Ratnamani Metals, Karur Vysya Bank and Euroceramics, to name a few.

According to market sources, as on December 31, 2007, the size of the troubled entity's holdings was close to Rs 2,700 crore, of which the maximum holdings was of Jaiprakash Associates amounting to Rs 651.60 crore.

Out of 77 companies, the top companies with BSMA include Jaiprakrash Associates, Havells India, S Kumar Nation, Jindal Steel, Koutons Retail, SCI, Jain Irrigation, Usha Martin and many others. Most of these are mid-cap companies and many have started bleeding. The move may exert more pressure on the stock prices of many of these companies.

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