Friday, February 17, 2012

IVRCL Sold Significantly by the FII Norges Bank, as Q3 Disappoints

By Staff Reporter

IVRCL Ltd (BSE: 530773, NSE: IVRCLINFRA) counter in NSE on Thursday witnessed a significant sell of 15.97 lakh shares by the FII, Norges Bank, amounting to nearly 0.60% of the total shares in the company. Interestingly, there were no identifiable institutional buyers or promoters, as counterparties to the sale, which means that the massive sell by the FII was picked up by the wider market.

IVRCL promoters have a stake of only 11.18% in the company, as of Q3 SHP, which is very low by Indian standards. Even this low level was reached after the promoters picked up 1.66% stake in Q2 & Q3.

IVRCL Ltd is one of the leading infrastructure companies in India, operating in segments like water & environment, transportation, buildings, & power. An established player in both the Engineering, Procurement, & Construction (EPC) space, as well as the Lump Sum Turn Key (LSTK) space, IVRCL has also been active in newer forms of infrastructural project work like Build, Operate, Transfer (BOT), Build, Own, Operate, Transfer (BOOT), and Design, Build, Own, Operate (DBOOT).

IVRCL operates as six Strategic Business Units (SBUs) – Water Supply & Environmental Projects, Transportation, Building & Industrial Structures, Power & Transmission Projects, Power Generation, and Industrial Plant Projects. Clients include some of the largest government agencies like National Highways Authority of India (NHAI), Airports Authority of India, Indian Railways etc, public sector undertakings like ONGC, BHEL, NTPC etc, and leading private sector companies like DLF, Tata Projects, Jindal Steel & Power etc.  

Norges Bank, which is the Norwegian central bank, also manages Norway’s sovereign wealth fund through Norges Bank Investment Management (NBIM). NBIM manages one of the world’s largest equity funds, The Government Pension Fund Global. Unlike its name implies, it is not a classic pension fund, but a sovereign equity fund created through Norway’s petroleum revenues, as reflected from its former name, The Petroleum Fund of Norway. 

The Government Pension Fund Global, valued at $573 billion, is one of the largest equity investors in the world, estimated to hold 1% of global equity markets, and at 1.78% of the European equity market, is Europe’s largest equity investor. In India, The Government Pension Fund Global is registered as an FII sub-account under the FII account of Norges Bank.

Norges Bank had emerged as a major investor of IVRCL in December 2009, with a 3.46% stake, and has since then been a major buyer than a seller for a year, becoming the second largest non-promoter investor by December 2010. 

The buying continued and by March 2011, Norges Bank had become the largest non-promoter investor in IVRCL with a stake of 9.95%. Though they cut their exposure by 0.48% in the next quarter i.e June 2011, ever since then they have remained the largest shareholder with a 9.47% stake with no net sells.

That is why the market will be keenly watching Norges Bank’s sell of 0.60% on Thursday.

Norges seems to have taken its sell cue from the Q3 results announced recently. While in FY’11 only the topline was getting affected, the fiscal year-to-date results including Q3 shows that while topline is getting worse, bottomline too is getting impacted.

Other large stakeholders in IVRCL Ltd include, HSBC Global Investment Funds, ICICI Prudential Life Insurance Company, FID Funds Mauritius, Bajaj Allianz Life Insurance Company, The Master Trust Bank of Japan, Macquarie Bank, Aviva Life Insurance Company India Ltd, Tata Trustee Co, and Dimensional Emerging Markets Value Fund. 

Total Institutional stake is very high at 42.52%, dominated by FIIs. It will be interesting to watch the calls these institutions will take post Thursday’s sell by Norges Bank.

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