Govt to sell almost all SUUTI stake in L&T to meet divestment target

This will be the second sale of SUUTI stake this fiscal year after a 3% sale of Axis Bank last month

The government is ready to offload nearly the entire stake it holds in Larsen & Toubro (L&T) through Specified Undertaking of the Unit Trust of India (SUUTI) in the coming weeks as it looks to meet the Rs 80,000-crore disinvestment target for 2018-19.

The Centre holds a 1.8 per cent stake in the construction and engineering behemoth through SUUTI, valued at a little over Rs 3,300 crore as of Friday’s closing price of L&T shares. The department of investment and public asset management (DIPAM) plans to sell shares worth around Rs 2,000 crore before March 31, Business Standard has learnt from senior government sources.

This will be the second sale of SUUTI stake this fiscal year after a 3 per cent sale of Axis Bank last month.

As of end-February, DIPAM has garnered Rs 56,473.32 crore in divestment proceeds. To meet the target, a number of transactions are expected to be finalised over the coming few weeks.

These include share buybacks by Coal India, NMDC, and Oil India, which could get the exchequer around Rs 3,000 crore and the planned sale the Centre’s 73.4 per cent in Dredging Corp to a consortium of four ports, which will fetch around Rs 1,000 crore.

PFC’s acquisition of the Centre’s stake in REC, which is in the final stages of completion, is expected to garner Rs 15,000 crore, while there will likely be two more initial public offerings (IPOs) this year, of Mazagon Dockyards and MSTC, which could fetch around Rs 1,200 crore combined.

The sale of ‘enemy shares’, currently with the Custodian of Enemy Property for India, in 996 companies, and cleared by the Union Cabinet in November, may fetch around Rs 2,000 crore, while DIPAM is still optimistic about completing the strategic sale of at least two out of three companies, which could fetch Rs 1,000-1,500 crore. These companies are Pawan Hans, Scooters India, and Central Electronics. There is also the acquisition of construction consultancy company NPCC by another state-owned peer WAPCOS, a relatively small deal that could fetch around Rs 100 crore.

Officials say this is where the disinvestment activity for this year will stop. A number of other companies, which were supposed to be offered for an IPO or an OFS, will now be carried over to the next year as DIPAM wants to maintain a healthy pipeline for the 2019-20 disinvestment target of Rs 90,000 crore.

The bulk of proceeds for 2018-19 so far has come from the Centre’s two exchange-traded funds, the Bharat 22 ETF and the CPSE ETF.

Likely proceeds

 

• SUUTI to sell stake in L&T for around Rs 2,000 cr
• PFC-REC deal to rake in around Rs 15,000 cr
• Sale of govt stake in Dredging Corp to garner Rs 1,000 cr
• Rs 3,000 cr expected from buybacks of Coal India, Oil India and NMDC
• IPOs of MazagonDocks, MSTC may fetch  Rs 1,200 cr
• Two strategic sales to be completed, may fetch Rs 1,000-1,500 cr
• n Sale of enemy shares could bag Rs 2,000 cr