The government is looking to raise nearly Rs 22,000 crore by selling its entire stake in FMCG major ITC and leading private sector lender Axis Bank.
Sources told Economic Times (ET) that the government is hoping to complete the transaction by end of this week or early next week and that the transaction will be effected through a bulk deal on the Indian stock market.
The government holds stake in ITC and Axis Bank through Specified Undertaking of the Unit Trust of India (SUUTI), which owns 7.94% and 4.69% respectively in the two entities.
At the closing price of Rs 389.20 for shares of Axis Bank and Rs 173.90 for shares of ITC as of Tuesday on the Bombay Stock Exchange (BSE), the combined value of SUUTI stake in the two entities comes to Rs 22,123 crore.
As per the report, the Axis Bank shares have declined sharply by 53% in the last 3 months as investors are worried about surge in bad loans.
For the current fiscal, the government has set an ambitious target of raising Rs 2,10,000 crore through stake sale in state-run companies. This includes Rs 90,000 crore to be realised through sale of minority stake in Life Insurance Corporation (LIC) by way of an initial public offer and equity sale in IDBI Bank.
While the budget estimate of the government’s disinvestment target for 2019-20 was Rs 1.05 lakh crore, the government has subsequently reduced the target to Rs 65,000 crore.
Sources further told ET that several mutual funds and LIC are likely to take part in the proposed share sale.
While SUUTI has minority stakes in 52 listed and unlisted companies, most of it is present in Axis Bank, ITC and L&T. SUUTI has reportedly already sold its entire stake in L&T.