Some private equity firms are selling their stake in Indian shipbuilder Pipavav Shipyard Ltd, its top official said on Friday, causing the shares to plummet nearly 11%.
A lock-in period for investors in the stock ended on Friday, prompting some of them to sell, Pipavav Chairman Nikhil Gandhi told Reuters.,
"The lock-in period ended on October 1, and the pre-IPO investors who are expecting 3-4 times (returns) in less than 3 years may book some profits," Gandhi said.
New York Life Insurance, Indus Capital, Trikona Capital, Standard Chartered Private Equity and Citadel are among companies holding 100 million shares, which would be about 12%, he added. It was not immediately clear who was selling the stakes.
According to BSE data, New York Life Insurance held 4% stake and Citadel Mt Trading held 3.45% as on June 30.
Pipavav Shipyard raised USD100 million via an IPO in September 2009 and issued shares at a price of Rs 58 each.
The resurgence of the stock market may have also been a trigger for selling, he added.
"There is so much of money being made, so there is a temptation to sell some stake, if not all," Gandhi added.
The main stock index has risen over 17% so far this year. Pipavav has risen over 59% in the same period. Rival ABG Shipyard has risen 14.7% while Bharati Shipyard has fallen 5%.
"The stock looks expensive compared to its peers," said an analyst with a local brokerage who declined to be named. "So its a good strategy for investors to exit at current levels."
Its shares closed down 8.73%, after a 11% slide earlier in the day, to RS 86.20 in a firm Mumbai market.
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