SU-UTI to go slow on blue chip stake sale

Strategic investors, overseas funds and domestic institutions eyeing Specified Undertaking of UTI's stake in bluechips such as Larsen & Toubro, UTI Bank and ITC Ltd will have to wait for at least a year more.

It is learnt that the government is in no hurry to find buyers for the three prized possessions of SU-UTI, which was carved out from the erstwhile Unit Trust of India in a restructuring in late 2002 to find buyers and exit from the latter's strategic investments. "We'll wait for one more year before taking a decision," a source said.

SU-UTI holds 27.47 per cent stake in UTI Bank, 11.87 per cent in ITC Ltd and another 9.21 per cent in L&T, making its total holdings worth a whopping Rs 16,685 crore at current prices. 
 

WHAT'S IN THE KITTY
Company	Stake (%)
UTI Bank	27.47
ITC Ltd	11.87
L&T	9.21
Total holding worth Rs 16,685 crore at current prices

Several strategic investors including foreign entities would be eyeing stake in the three entities, as the three represent the fast growing sectors of banking (UTI Bank), retail (ITC) and engineering and construction (L&T).

Another key fact makes the stake sale very crucial "" all the three blue chips are professionally managed and they have no identified promoter group or promoters.

S B Mathur, administrator of SU-UTI, said: "We have time till October 2009 to exit from the holdings. There is no pressing urgency for selling the stakes."

UK's British American Tobacco (BAT), whose interest in its former Indian arm ITC Ltd is well-known, may also be sitting on the sidelines for a move from SU-UTI.

The government, which played a big role in thwarting BAT Plc's attempt to wrest control of ITC in mid-1990s, may be willing to have a relook at the entire issue, sources said. When probed on the issue, Mathur said it was up to the government to take a final view on the matter.

But he added: "Issues that were relevant 15 years ago may not be relevant now. With globalisation and more opening up of the economy, we may have to look at things in a different perspective. We have to weigh the pros and cons before taking a final decision."

A similar scenario exists in UTI Bank's stake sale too. HSBC, Citigroup and Barclays Capital hold about 5 per cent stake each in the private sector bank and the proposed further opening up of the banking sector in 2009 might see the foreign banks throwing their hats in the ring for UTI Bank. Coincidentally, the SU-UTI mandate for exiting from all its investments ends on the same year.

In the case of Larsen & Toubro too, the biggest shareholder in Life Insurance Corporation (16.13 per cent), followed by L&T Employees Welfare Foundation (13.26 per cent).