The central government is reportedly looking to raise around to Rs 22,000 crore by selling its entire stake in FMCG major ITC and private sector lender Axis Bank. Reacting to the news, shares of ITC and Axis Bank declined as much as 7.64 per cent and 5.42 per cent, respectively, during intraday trade on the Bombay Stock Exchange on Wednesday.
The transaction is expected to be completed by the end of this week or early next week, Economic Times reported quoting sources aware of the development. The transaction will be done through a bulk deal on the domestic stock exchanges, the daily reported.
As on March 31, 2020, the Centre owned 7.96 per cent stake in ITC through the Specified Undertaking of the Unit Trust of India (SUUTI), the administrator that manages the funds of the erstwhile Unit Trust of India (UTI) on behalf of the government. Similarly, the government owns 4.69 per cent shareholding in Axis Bank via SUUTI, as of March quarter of FY20.
The report said that the proposed transaction will be done at a marginal discount of 2-3 per cent to underlying trading price on the transaction date. The government may "exit completely" from ITC and Axis Bank, it added.
Shares of ITC ended at Rs 163.80, down 5.81 per cent, while ITC closed marginally down (0.22 per cent) at Rs 388.35 on the BSE.
The move is being seen as a part of Modi government's plan to raise Rs 2.1 lakh crore through divestment in state-run companies. This includes Rs 90,000 crore from partial stake sale in Life Insurance Corp (LIC) through an initial public offer (IPO) and equity sale in IDBI Bank. The Centre has already offloaded its entire stake in Larsen & Toubro.
By Chitranjan Kumar