The Special Undertaking of UTI or SUUTI has started the process of selling most of its stake in Axis Bank.
The field has been thrown open to top 15 merchant bankers and they are presenting their credentials to the SUUTI management and the finance ministry, according to sources close to the development. A final decision on appointing an advisor for the sale will be taken soon.
The advisor will decide on the modalities and timing of the stake sale. “All we have said is that the mechanism has to be compliant with the rules prescribed by the Securities and Exchange Board of India,” a source told Business Standard.
The sale process may not be confined to state-run entities. Private players may also be allowed to participate as the Reserve Bank of India has made it clear that Axis Bank, earlier called UTI Bank, had received a licence to operate as a ‘private bank’.
In the past, the Life Insurance Corporation and Corporation Bank have proposed to take over the bank. But when the government discussed the issue with RBI, the regulator made its stand clear, prompting SUUTI to opt for a process that will result in diversified shareholding.
On Tuesday, the shares of Axis Bank rose 7.76 per cent to close at Rs 760.85 on the Bombay Stock Exchange. Based on this price, the 97.22 million Axis Bank shares held by SUUTI are worth nearly Rs 7,400 crore. The sale of 17 per cent stake will fetch around Rs 4,600 crore.
Axis Bank is one of the three blue chip stocks in SUUTI’s portfolio, with L&T and ITC being the other two. But sources said that the entity that acquired the non-NAV schemes of the erstwhile Unit Trust of India did not intend to cash out immediately. “The investment in ITC and L&T were part of treasury operations, while UTI was the promoter for Axis Bank. Since cash is not needed to meet the redemption obligations, the shares of ITC and L&T are not being sold at the moment,” a source said.
In case there is a shortfall to clear liabilities worth over Rs 10,000 crore that are due for redemption between March and June 2009, SUUTI will use its investment in unlisted companies and other instruments to bridge the gap. The unlisted portfolio itself is worth anywhere between Rs 500 crore and Rs 1,500 crore and SUUTI has started a o ne-time settlement scheme for the purpose.
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July 11: SUUTI to offload 17% in Axis Bank
