New MPS rules: Like Diwali came early? (stage)

Hello,

We saw several long game bets across public, private, and hybrid asset classes this week.

Starting with Bank of Baroda, which emerged as the top bidder for Jet Airways’ prime BKC office, a reminder that distressed assets still attract aggressive strategic interest. The state-owned lender’s play in a premium Mumbai location reinforces the recent confidence seen in India’s office assets.

Meanwhile, the Wealth Company launched a ₹2,000-crore Bharat Bhoomi (real estate) Fund focussed on Tier II and III cities in India.

Japan’s Mizuho is reportedly looking to acquire Avendus, an Indian investment bank, a move that would underscore both the value of homegrown advisory talent and India’s enduring M&A relevance despite global softness.

I hope you enjoy this week’s roundup, and please do connect with me on LinkedIn to find out how I can help with your next M&A deal.

Let’s dive in.

Deal Tracker

Our weekly roundup of confirmed M&A deals in India.

Market Trends

Hope floats

SEBI’s recent moves to enforce Minimum Public Shareholding (MPS) norms, most notably from its June 18 board meeting mandating 25% public floats, has the potential to reshape India’s capital markets. 

The watchdog’s gaze has led to:

• The UltraTech Cement divestment worth ₹667 crore following its 82% stake acquisition in India Cements.

• Adani Offshore Funds’ penalisation for alleged proxy promoter holdings by Mauritius-based funds, violating disclosure rules.

These cases signal an assertive stance on transparency and liquidity, with the regulator pushing markets toward global best practices.

India sadly still does not rank among the countries with the biggest institutional investors globally despite being among the fastest growing economies in the world. 

But as liquidity improves, and pricing becomes more transparent, international institutions will participate with greater confidence. SEBI understands that international funds need the ability to buy or sell in volume more than they care for the India story. 

Higher float limits the power of ‘promoters’ – i.e. a major shareholder, typically a founding family member, who may not be involved in daily operations but retains significant control – making room for better governance, smoother successions, and board independence. 

The renewed pressure on the promoter-held threshold is aiming to open doors to foreign inflows via benchmark indices like MSCI and FTSE.

Sometimes compliance isn’t just about following the rulebook, though. 

The authorities might want to look in the mirror. Several public sector banks and firms are still over 90% government-owned (under SEBI’s new MPS rules, even government-owned firms must reduce their stake to ensure public liquidity as they move towards privatisation).

SEBI, in a departure from its one-size-fits-all approach, has offered them a voluntary delisting route at a fixed premium without holding the markets hostage.

AUM growth

Now let’s look at mutual fund AUM growth since 2019. 

With capital swelling, float discipline is a natural next step. 

But, oh no, look at the float levels of PSU banks:

How far some of them still need to go.

If corporate governance is a concern, MPS is proving to be a useful anti-corruption tool. 

SEBI has cracked down on circular trading, proxy ownership, and board capture; making price rigging less likely.

And who toes the line? Reliance, Aditya Birla Capital, UltraTech, and Yes Bank are moving to comply while UCO, IOB and other public sector banks are lagging. 

What about us? 

To risk a bad metaphor – float matters but Indian markets remain top-heavy. 

TCS, with a 63% free float, doesn’t dominate despite its size, as much of its stock is locked in. Hindustan Zinc, despite being a PSU, has a healthy float at approximately 60%. 

Mutual funds investing in India are overweight on liquid large caps. Small and mid caps with low float don’t get the same attention risking concentration. 

Why does promoter culture persist? No inheritance tax, for one. Heirs can sit on shares indefinitely equating cash with emotional legacy. SEBI tries to pierce through the corporate veil of control by requiring disclosures even of distant relatives – not done in any developed market. India’s idiosyncratic capitalism is such, it makes this necessary.

But history has stuck to the cap tables. Privately-managed lender ICICI Bank which carries government shareholding from its development banking past. HDFC, by contrast, shows what a clean private float may look like. Different legacies matter in non-family held concerns as well.

Targeting workarounds

But promoters still game the system. Buybacks before stake sales, inflated valuations, proxies, preferential allotments. 

SEBI is responding with more rules, more enforcement, more disclosures, and a shift from box-ticking to behavioural scrutiny. 

The fuss is not petty housekeeping. For an unequal country like India, this is nation building. As billions of dollars flood into the country it needs capital structures that can absorb them.