Government To Start Exiting Larsen & Toubro Stake After 13 Years
Government moves to meet its divestment target, starts with SUUTI assets.
The government is likely to sell an up to 3 percent stake in Larsen and Toubro Ltd. (L&T) held by the Specified Undertaking of the Unit Trust of India (SUUTI), as early as Friday, November 4, 2016, said two bankers close to the deal. The stake is likely to be sold via a block deal on the stock exchange, and the book for the deal is yet to open, the bankers said. Bloomberg has reported that the floor price for the deal has been set at Rs 1,415.6 per share.
Currently, SUUTI holds 8.32 percent or 7.59 crore shares in L&T.
A 3 percent stake sale in L&T could fetch the the government up to Rs 4,000 crore at current prices.
AM Naik, executive chairman of the L&T group, is travelling overseas, and not yet offered comment on the development.
SUUTI was formed in 2003 when the government-owned Unit Trust of India (UTI) was split into two units – UTI Trustee Company Private Ltd. and SUUTI – in an effort to restructure the beleaguered asset manager. SUUTI holds stakes in 43 listed companies valued at over Rs 56,500 crore at current market prices. Its biggest holdings are L&T Ltd., Axis Bank Ltd. and ITC Ltd., the combined value of which is Rs 56,366 crore at current market prices. The government last sold a 9 percent stake in Axis Bank in March 2014, paring its stake to around 11 percent. The Life Insurance Corporation emerged as the largest bidder in that stake sale through which the government raised over Rs 5,500 crore.
Successive governments have for long expressed intent to divest SUUTI’s shares in order to meet their divestment targets.
This year, the government has a divestment target of Rs 56,500 crore for financial year 2016-17, including Rs 20,500 crore from strategic sale in loss and profit-making public sector units.
In September this year, the finance ministry invited 12 bankers seeking proposals for the sale of securities held by SUUTI.
Citigroup, ICICI Securities and Morgan Stanley are the book runners for this transaction, according to information on the department of divestment’s website.