Wipro Enterprises: Investors must take the opportunity to exit

Category: Academics

IiAS believes that Wipro Enterprises’ non-promoter shareholders would be better placed to tender their shares to the company. IiAS believes that Wipro’s promoters views, reflected in the resolution will prevail. At the same time, minority shareholders are not being shortchanged either. At Rs.367 per share, those that stayed invested in Wipro Enterprises are getting a better return than those that chose to exit by taking Wipro shares at the time of the demerger. Wipro Enterprises Limited (Wipro Enterprises) was demerged from Wipro Limited in November / December 2012, with the clearly articulated intention to keep Wipro Enterprises unlisted. Wipro Enterprises would house the non-IT related businesses, while Wipro Limited would become a pure IT player. While companies often make decisions to demerge businesses to unlock value, what made this different was the decision to keep the demerged business unlisted. Wipro’s non-IT business is a mixed bag. The businesses range from personal care products, lighting solutions to water and waste management for industrial applications. The demerger unlocked the value of the IT business, which was growing rapidly. At the same time, the demerger scheme attempted to reduce promoter stake in Wipro Limited from 78.3% to 75.7% - closer to the promoter holding cap of 75% set by SEBI at that time.