People walk past a branch of Axis Bank Ltd. on Mahatma Gandhi Road in Gangtok. (Photographer: Prashanth Vishwanathan/Bloomberg)

SUUTI To Sell Up To 3% Stake In Axis Bank Via Offer-For-Sale

The government said it will launch an offer-for-sale to divest up to 3 percent stake in Axis Bank Ltd. it holds through Specified Undertaking of United Trust of India as it rushes to meet its divestment target for the ongoing financial year.

The sale will fetch the exchequer a little less than Rs 5,500 crore, a government official told BloombergQuint requesting anonymity, taking it closer to the Rs 80,000-crore divestment target for 2018-19.

The government—that held 9.56 percent stake in Axis Bank through SUUTI as on Dec. 31—will sell 1.98 percent stake in the private lender at a floor price of Rs 689.52, according to its exchange filing. SUUTI also has the option to sell another 2.63 crore shares, or a 1.02 percent stake, in the bank. The floor price has been set at a discount of 3 percent from the bank’s previous closing price of Rs 710.35 apiece.

The government planned a bundled sale of its stake in companies, say through exchange traded funds and SUUTI holdings, to meet its divestment target, Atanu Chakraborty, secretary at the Department of Investment and Public Asset Management, had told BloombergQuint in a post-budget interview.

So far, the government mopped up Rs 35,533 crore—less than half of its full-year target. It’s also looking at buybacks and off-market deals to raise funds.

Meeting the divestment target is important to bridge the budget gap as lower tax collections and increased expenditure due to farm loan waivers may worsen the fiscal health of the country. To be sure, the government, in its interim budget 2019, revised the fiscal deficit target at 3.4 percent of GDP for the ongoing financial year from 3.3 percent earlier.

Also read: Government May Miss Divestment Target By Rs 20,000 Crore, Says Report