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What 25% Free Float means to Markets ?

June 7, 2010

Government raises threshold for public shareholding in listed companies: The Indian government today amended the Securities
Contracts (Regulation) Rules, making it mandatory for listed companies to have a minimum public holding of 25%.

We present below a sort of the broad based BSE 500 index which indicates that the following companies have a public holding of less than 25% and will have to comply with the change in regulation over the next few years.

At current market prices, equity aggregating US$32 bn will have to be sold down to achieve the norms stipulated. Of this, at least US$13 bn will have to be raised over the next 12 months (given the stipulation of at least a 5% increase every year to get to the target).

The Government of India will have to raise the lion’s share US$27 bn as indicated below.

Private sector companies with less than 25% public share holding is as indicated below.

Multi-national companies with less than 25% public share holding is as shown below and they may as well go ahead and de-list their shares from the market.

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