Buyback refers to a business activity whereby a firm buys back its own listed shares in order to lower the number of shares that are accessible on the open market or stock market. Companies buy back shares to control their stock position in the open market or, as we might say, to raise the value of the shares that remain after the buyback by lowering the supply to shareholders.
When required to submit all or a portion of the shares within the specified time limit in order to participate in the repurchase, a shareholder may be offered a tender offer. Companies buy back shares on the open market over time, either all at once or on a monthly basis. The company can either fund the repurchase with cash on hand or by taking on debt.
Current List of Upcoming Buyback Offer 2024
Here is an Upcoming Buyback of Share List for 2024. Continue investing in the primary market and keep watching out for the newest share buyback 2024 offers.
Types of Buyback of Shares
The following are the most commonly used methods for a company to buy back shares in India.
1. Tender Offer Buyback:
In a tender offer, the corporation buys back its shares proportionately from the current owners within a predetermined time frame for a defined price. To all eligible shareholders listed on the business’s books as of the buyback record date, the company sends a letter of offer and a Tender Form. The repurchase offer is open to all qualifying shareholders who hold their shares in either physical or demat form.
2. Open Market Buyback:
A corporation may repurchase shares on the open market either through the stock exchange or the book-building procedure. When a company buys back shares on the open market using a stock exchange mechanism, it can only do so using an order-matching mechanism on stock exchanges with national trading terminals. The stock exchange’s open market offerings are not available to promoter participation. The offer is open to all other shareholders who own equity shares in the firm.
The repurchase is channeled through electronically connected bidding centers in the book-building process. A merchant banker is chosen by the corporation to oversee the repurchase process. Based on the reaction to the repurchase, the merchant banker and the business decide on the buyback price.
Why Do Companies Buyback of Shares?
Investors can participate in the buyback offer as long as the window is open. In the buyback, the company often offers a greater share value.
Here is an example of a share buyback: In the event that XYZ Limited makes a buyback offer, they are going to do so at a price of Rs. 1000 as opposed to the present price of Rs. 600. In basic terms, the investors will receive a 400 rupee premium above the holding price. Investors can purchase the stocks before the company’s record date if they do not already hold them in their Demat accounts.
Reasons Why Companies Go For Buyback of Shares.
- They want fewer shares available on the open market.
- The firm thinks the share price is too low.
- To raise the Company’s shareholder value.
- Boost the open market share price.
- The business has extra cash on hand.