DB Corp Buyback 2018: Assessment of Arbitrage Returns

DB Corp Buyback 2018 has just come to an end. We intend to examine pure Arbitrage Returns to a short term investor in DB corp buyback 2018 in this post. Details of DB Corp Buyback are as follows:

The Board of Directors of DB Corp at a meeting on 25/05/2018 approved proposal of buyback through “Tender Offer” route.
The Buyback was announced for an aggregate amount not exceeding Rs. 312.80 crore at maximum price of Rs.340 per equity share , translating to 92,00,000 shares at a price of Rs. 340. This translated to 16.29% of the fully paid up equity capital of the Company.
The company fixed 18 July 2018 as the record date for the above purpose.
DB Corp Buyback issue remained open from August 7, 2018 and closed on Thursday, August 23, 2018.
Against a reservation of 13,80,000 shares for the retail, 10,635 retail investors tendered 13,80,000 shares resulting in acceptance ratio of 40%.
DB Corp Buyback issue concluded in end August with completion of Buyback and return of remaining shares tendered by investors.

DB Corp Buyback: Assessment of Arbitrage Returns

This assessment is based on the premise that a short term investor has purchased the stock a day after the approval of Buyback by Board and tendered all the shares to the company against buyback and sold the remaining in the market after they were returned back by the company.

1	Board Meeting for Buyback	25-05-2018
2	Shares Purchased	600	Nos.
3	Purchase Price a day after Board meeting	263.48	per share
4	Purchase Amount	158088	INR
5	Buyback Price	340	INR
6	Acceptance Ratio	42.50%
7	Shares Accepted	255	Nos.
8	Amount from Buyback of Shares	86700	INR
9	Shares Returned Back	353	Nos.
10	Market price after return of shares	225.3	INR
11	Amount from selling of Shares returned back	79530.9	INR
12	Total amount realized from buyback & sale	166230.9	INR
13	Absolute return on amount Invested (12) – (4)	8142.9	INR
15	% Absolute Return in 3 months period	5.15%

Conclusion

DB Corp Buyback 2018 has given an Absolute 5.15% Return of to short term investors. This assessment is based on the premise that the investor purchased the stock a day after the approval of Buyback by Board and tendered all the shares to the company against buyback and sold the remaining in the market after they were returned back by the company. In this duration the stock price varied both on the upside and downside from the price considered and returns of those investors who purchased at a different time and rate, varied accordingly.

Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. I may have vested interest in every stock I discuss and my views may be biased. Please do your own due diligence as stock market investments have high degree of inherent risk.