LIC to sell one-third stake in ACC to Holcim

The Life Insurance Corporation of India (LIC) is set to offload 5.7 per cent of its holding in Associated Cement Company (ACC) in an open offer made by the global cement major Holcim. LIC has 15.7 per cent stake in the cement company.

However, LIC intends to hold on to a significant portion of its holding in the Indian cement company, as it sees value in the stock and feels this is not the time to exit from the cement sector.

It would only be selling one-third of its stock to the cement major. "We will retain 10 per cent stake in ACC," said LIC chairman R N Bhardwaj.

The Securities and Exchange Board of India (Sebi) today gave its approval to Holcim's open offer to acquire over 50 per cent of ACC stock at a price of Rs 370 per share.

Over 50 per cent of LIC's stake in ACC, amounting to 1.62 crore shares or 9.5 per cent of the stock, had been acquired from an auction of shares belonging to deceased stock broker Harshad Mehta in 2003.

As these shares were acquired at a price of Rs 170 in the block deal, LIC wants to book profit partially even as it intends to retain two-thirds of its current holding.

Financial institutions (FIs) collectively hold 18.63 per cent stake in ACC. But most FIs do not find the open offer price attractive as they anticipate immense value in cement stocks.

Foreign institutional investors (FIIs), which hold a higher stake of 23.27 in ACC, would now play a crucial role in the success of the open offer.