Putting to rest speculation on the sale of the Specified Undertaking of the Unit Trust of India (SUUTI)’s stakes in several listed companies, Finance Minister P Chidambaram on Monday said, “There is no proposal to look at the sale of shares held by SUUTI.”
According to the BS Research Bureau data, SUUTI holds stakes of more than one per cent each in 19 firms. The holding, if divested today, would fetch about Rs 50,000 crore (more than the government’s disinvestment target of Rs 30,000 crore for this financial year). Of this, Rs 46,643 crore would be accounted for by the stakes in three blue-chip companies—11.54 per cent in ITC, 8.27 per cent in Larsen & Toubro and 23.58 per cent in Axis Bank.
These three companies do not have identifiable promoter group shareholders and are run by professional managements.
Any offloading of shares by the government would result in the transfer of control to potential buyers, leading to uncertainty.
The finance minister’s statement on Monday, therefore, came as a breather to these firms, analysts said. While the ITC stock rose 0.8 per cent to close at Rs 288.30 on the BSE on Monday, L&T slipped one per cent to close at Rs 1,687 and Axis Bank lost 0.73 per cent to close at Rs 1,222.30.
SUUTI also has fixed assets of land and office premises. On a written-down book value basis, these assets are worth Rs 80 crore.
The dilution of SUUTI holdings was first mooted last year, under then finance minister Pranab Mukherjee. At that time, market conditions were unfavourable for regular stake sales in public sector undertakings.
ICICI Securities, one of the investment banks involved in the divestment programme, had suggested the sale of holdings in SUUTI as a way to unlock value for the government.
When the paper was given, the value of SUUTI’s holdings stood at Rs 31,000 crore. In the past year, the portfolio has gained, primarily riding on the recent market rally. This has made the government confident of meeting this year’s disinvestment target without diluting SUUTI’s stakes.
|RISING PORTFOLIO |
|As on Oct 29, 2012 || |
On BSE (Rs)
|% change ||SUUTI stake % || |
|Prev close ||Close ||Mcap of company ||SUUTI value |
|Axis Bank ||1,231.25 ||1,222.30 ||-0.73 ||23.45 ||52,145.77 ||12,228.18 |
|ITC ||285.95 ||288.30 ||0.82 ||11.41 ||226,693.17 ||25,865.69 |
|Larsen & Toubro ||1,705.85 ||1,687.40 ||-1.08 ||8.24 ||103,758.23 ||8,549.68 |
|Total || || || || || ||46,643.55 |
|Data Compiled by BS Research Bureau |