Published 26th June 2024
Investors avoid Indian holding companies due to the illiquid nature of their underlying investments and taxation concerns.
The investor malaise has led to holding companies trading at steep discounts to their book value, hindering price discovery.
To address the concerns, SEBI has ordered the bourses to hold special auction sessions without circuits for holding companies starting October 2024.
The share price of several holding companies surged nearly 20 per cent on June 24, 2024, following this news.
Before you rush to join the party, note that holding companies must meet four criteria to be eligible for the call auction.
The company must fall under the holding or investment company segment in the uniform industry classifications provided by stock exchanges.
The company should have been listed and available for trading for at least one year, without being suspended.
The company’s listed equity investments should constitute at least 50 per cent of its total assets.
The company’s discount to its book value should at least be 50 per cent.