“Given the current timeline, the government is hoping to complete the transaction by the end of this week or early next week,” a person familiar with the development told ET. The transaction will be done through a bulk deal on the Indian bourses, he added.
The government held stakes through Specified Undertaking of the Unit Trust of India (SUUTI), which owns 7.94 per cent in ITC and 4.69 per cent in Axis Bank, as on March 31, 2020.
Shares of Axis Bank settled at Rs 389.2, down 3.38 per cent, while ITC was marginally down (15 paise) to Rs 173.9 at close of market hours Tuesday on the BSE. At this price, the combined value of SUUTI stake in ITC and Axis Bank is Rs 22,123 crore.
The Axis Bank stock has fallen 53 per cent in the last three months as investors expect a surge in bad loans. ITC has come down 19 per cent compared with the Sensex, which has lost about a quarter.
For the current fiscal, the government has sought to raise an ambitious Rs 2,10,000 crore from the sale of holdings in state-run companies. This includes Rs 90,000 crore to be raised from the sale of a minority stake in Life Insurance Corp (LIC) through an initial public offer and equity sale in IDBI Bank.
For 2019-20, the government lowered its disinvestment target to Rs 65,000 crore from the budget estimates of Rs 1.05 lakh crore.
Sources said that the various mutual funds and LIC are expected to participate in the proposed share sale. “The proposed transaction is expected at a marginal discount of 2-3 per cent to underlying trading price on the transaction date,” said a person quoted above.
SUUTI has minority stakes in 51 listed and unlisted companies, with most of its value locked in Axis Bank, ITC and L&T. It has already sold its entire stake in L&T. “After the current round of share sale, the government is likely to exit completely from these two companies,” said a person familiar with the transaction.
Of the 51 companies, eight entities in which SUUTI owns either significant minority or majority stake are — NSDL, STCI Finance, Over-the-counter Exchange of India, Stock Holding Corporation of India, UTI-IAS and UTI Infrastructure Technology Services, North Eastern Development Finance Corporation and NSDL e-Governance Infrastructure.