The people with old portfolios – some of them in their ’80s is coming from a completely unexpected source (that is what risk is supposed to be, is it not?).

My parents lost Cadbury, Kodak, Hoganas, ITW Signode, …significant shares in their portfolio to a ‘buy-back’ in the 1980s…or 1990s, not sure.

Buy-back is a process of a company / its promoters buying the shares of its listed entity – with a view to rewarding its shareholders OR to take the company private. Here we are talking of the second variety.

Now thanks to this new law which says that at least 25% of the company should be in the markets for a company to be listed they are likely to lose a lot of shares like Colgate, Procter & Gamble, Gillette, Oracle, Alstom, ABB, Siemens, Areva T&D, Basf, Ingersoll Rand, Cummins….and perhaps some others.

Also there is no clue how promoters of Indian companies with very small outside holding will react – Mahindra Holiday Resorts, Wipro, Cholamandalam Investment and Finance, Wendt,

If the proposal becomes a law and all these companies decide to go private, suddenly my parent’s portfolio will be full of Ntpc, Nhpc, L&T, Tata Power, Tata Steel,….and look like an infrastructure portfolio and not a balanced one! Funny how risk can come from anywhere!! 🙂

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