New Delhi: The government on November 4 raised Rs 2,100 crore through sale of 1.63 per cent stake in Larsen & Toubro (L&T) held through Specified Undertaking of the Unit Trust of India (SUUTI).
The transaction took place through block deals with private institutional buyers picking up the entire chunk on offer, leaving no headroom for state-run LIC to participate, sources said.
SUUTI, which was created to take over part of the assets and liabilities of the now-defunct Unit Trust of India, held 8.16 per cent stake in L&T. The government had approached the market to sell a minimum of 1.50 per cent stake in L&T at Rs 1,415 apiece.
"Government has sold 1.63 per cent stake at a discount of 2 per cent over previous closing price (Rs 1,444.55). The deal has garnered Rs 2,100 crore to the exchequer," a source said.
Shares of L&T were quoting at Rs 1,417, down 1.91 per cent over previous close in the afternoon trade on the BSE. The government, sources said, went ahead with 1.5 per cent stake sale to show the market that there is no urgency for big stake sales and no need for any distress selling.
"Government had got the market appraisal done professionally and sold the stake to private players with no participation from LIC," the source said. Besides L&T, SUUTI also holds stake in 51 companies with major holdings in ITC (11.17 per cent) and Axis Bank (11.53 per cent).
The government intends to lower its stake in these firms over a three year period and has appointed merchant bankers for advising on the sale process. The proceeds from SUUTI stake sale would help swell government's disinvestment kitty to over Rs 10,700 crore so far this fiscal.
"The SUUTI stake sale as well as buy backs show that the government is not sticking to the conventional OFS method for share sale. It is also talking of launching at ETF which shows that all possible reform in the disinvestment process is underway," a top official said.
This fiscal the government has budgeted Rs 56,500 crore of revenues from disinvestment, including Rs 20,500 crore from strategic sales. The government had, in March 2014, sold 9 per cent stake in Axis Bank to raise Rs 5,500 crore.
