The Indian equity market is witnessing a new trend in recent years – global multinational corporations (MNCs) are increasingly divesting stakes in their Indian subsidiaries.
The Scale of the Phenomenon
The numbers tell a compelling story of value realization at unprecedented scale. BAT has emerged as the poster child of this trend, having sold stakes worth over ₹30,000 crore in ITC across multiple transactions – a 3.5% stake for ₹17,485 crore in March 2024, followed by another 2.5% stake for ₹12,941 crore in May 2025.
Similarly, Whirlpool Corporation has been executing a phased divestment strategy, first selling 24% of its Indian arm for ₹4,039 crore in February 2024, followed by announcements of further stake reductions to as low as 20%.
Meanwhile, automotive component manufacturer ZF Group offloaded 7.5% of its stake in ZF Commercial Vehicle Control Systems India for approximately ₹2,200 crore.
Capital Allocation Strategy: Global Priorities
Global companies use the money they raise for two main reasons: buying back their own shares in their home countries and paying off debt.
Take BAT for example. BAT plans to reduce net debt to a target range of 2-2.5 times adjusted EBITDA by the end of 2026. This strategy is supported by the proceeds from selling its stake in ITC.
Whirlpool’s divestment is similarly strategic, aimed at paying down $1.85 billion in debt due in 2025. The company expects to reduce debt by approximately $700 million following the stake sale.
Valuation arbitrage between Indian subsidiaries and their foreign parents.
As Whirlpool CEO Marc Bitzer candidly explained, “if we have a business which is trading at 50 times multiple and your own company trades at a lot lower, it is basic arbitrage”.
Market Liquidity and Investor Appetite
Strong demand from mutual funds and insurance companies has made it easy for foreign parent companies to sell multi-thousand crore stakes without any difficulty.
Conclusion:
The strategic monetization of Indian subsidiaries by global MNCs represents one of the most significant structural shifts in India’s capital markets in decades. The rise in free float could reduce the scarcity premium that boosted high valuations, so investors need to be aware of this change.