Block deal bonanza for investors as bull run continues

• Mankind Pharma, Axis Bank and Fusion Microfinance saw large block deals where investors offloading stake.
• PayTM, Zomato, PB Fintech and other new-age companies too saw PE/VC investor exits in August this year.
• This block deal momentum is expected to continue as good valuations offer attractive exit options.
  

Indian stock market indices are scaling new highs every day with the Nifty having scaled Mt 21,000 and the Sensex at 70,000 mark. The bull market sentiment has given investors an opportunity to cash out of their stocks too. Topping the list is a mega block deal in the freshly listed Mankind Pharma wherein 8.7% of equity changed hands worth ₹6,395 crore.

This was followed by smaller but sizable block deals worth ₹1,120 crore of Axis Bank, and a ₹572 crore deal at Fusion Microfinance. It’s also the second round of bulk and block deals executed by PE and VC investors of stocks. The first round happened in August index run-up, when multiple block deals were executed in new-age internet companies.

PayTM saw four large block deals to the tune of ₹5,880 crore. Alibaba, Morgan Stanley Investment Management and Softbank were the top sellers. Zomato too saw its stock gain after it declared its maiden profits. It led to three large investors Softbank, Apoletto Asia and Tiger Global offloading stock to the tune of ₹2,460 crore.

As per market watchers, the bull run will continue along with block deals. “Expected uptrend in market and positive sentiment in 2024 may act as a catalyst for strategic moves though block deals for institutions. Institutions keenly leverage these opportunities and use block deals as a vehicle for capitalizing on these favorable market conditions is only set to intensify,” Sheersham Gupta, director and senior technical analyst at Rupeezy told Business Insider India.

Large blocks of 2023

Company	Sellers	Value
Mankind Pharma	Chrys Capital, Capital Group and Everbridge Partners*	₹6,395 crore
PayTm	Alibaba, Morgan Stanley Investment Management and Softbank	₹5,880 crore
Zomato	Tiger Global, Apoletto Asia Softbank	₹2,460 crore
Axis Bank	Bain Capital & more*	₹1,120 crore
Delhivery	Tiger Global	₹590 crore
PB Fintech	Tencent	₹560 crore

Source: Media reports, Kotak Institutional Investors
*Possible sellers

Public markets offer exit options too

Private equity and venture capital investors had also landed a large bounty by exiting via public markets in 2023. As per data available until the third week of November, investors sold off stock worth ₹10,007 crore across 17 initial public offers (IPOs), as per data by Primedatabase.

The company which saw the chunkiest bulk deal, also saw the chunkiest IPO exit. Beige, Cairnhill CGPE, Cairnhill CIPEF and Link Investment TrustBeige sold stock to the tune of ₹3,244 crore as a part of the IPO.

Few other large IPOs like Concord Biotech, R R Kabel and one of India’s most-awaited issues, Tata Technologies landed a large bounty for PE/VC players. A busy IPO season ahead is expected to give many exit options to investors.

Stock markets will keep on making PE/VC investors richer in the coming year too both in primary and secondary markets. The promise of good valuations is expected to keep their exit options attractive.

“Anticipating a bullish market trend in the upcoming year, fueled by promising GDP growth, easing inflation and a projected slowdown in developed economies, India is emerging as a prime investment destination. This not only attracts foreign investment but also increases potential block deals,” said Gupta.