Update: This copy has been updated to incorporate the confirmation of Moneycontrol's newsbreak.
Veteran stock market investor Radhakishan Damani-led Avenue Supermarts, which operates supermarket chain DMart, has approved the launch of a qualified institutional placement (QIP) by the promoters.
The company said the issue has been approved to the tune of 20,000,000 shares, which would translate into a size of around Rs 4,000 crore at current market price.
The company's confirmation comes minutes after Moneycontrol reported on the share sale plan. Moneycontrol was also the first to report on the promoters' stake sale plans on November 13, 2019. The report had said the promoters would trim their stake by February 2020 to meet Sebi's minimum public shareholding norms.
The Avenue Supermarts stock has surged by 22 percent in the last one month.
The promoters hold 80.21 percent stake in the company. SEBI's minimum public shareholding (MPS) rule for listed companies stipulates that promoters cannot own more than 75 percent and that public shareholders should own a minimum 25 percent.
"This will be a mega share sale and should be launched within the next 24 hours. Initially, the issue will be in the form of a qualified institutional placement (QIP). If required later, an offer for sale (OFS) component will be added," one of the sources said.
The promoters have to shed 5.21 percent stake to comply with regulatory norms. At current market price, a 5.21 percent stake would be valued at around USD 1.03 billion, or Rs 7,350 crore.
Newly-listed companies are given a three-year window to comply with the SEBI rule on minimum public shareholding. Avenues Supermarts listed on the bourses on March 21, 2017.
From the launch of its first store in Powai, Mumbai in 2002, DMart today operates a retail business area of 5.9 mn square feet and has 176 stores across 11 states and 1 union territory, according to its 2018 annual report.
In FY 18-19, Avenue Supermarts registered revenues of Rs 19,916 crore and a profit of Rs 936 crores. The supermarket chain which operates on a low-cost model is present in 3 segments, namely, foods, non-foods and general merchandise and apparel, with half of the revenues coming from the first segment.
It counts Future Retail, Trent, V-Mart Retail, Arvind Fashions and Spencers Retail as its listed peers.