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Govt kick starts SUUTI stake sale process to boost revenue
Up to three qualified merchant bankers and selling brokers for 'attending, assisting and advising' on the SUUTI Holdings to be appointed. Click to read our view on the sale
By Asit Ranjan Mishra | Jul 11, 2016
The National Democratic Alliance finally seems to have made up its mind to sell its minority stakes held in many listed and unlisted companies through the Specified Undertaking of UTI (SUUTI), an offshoot of erstwhile UTI, which could boost its revenue and help meet the disinvestment target.
In a notification put on the SUUTI website, the government has sought to appoint up to three qualified merchant bankers and selling brokers for "attending, assisting and advising on the SUUTI Holdings for a period of three years".
SUUTI has at present stakes in 51 listed and unlisted companies, including Axis Bank, ITC Ltd, Larsen and Toubro Ltd, ICICI Bank, Reliance Industries Ltd, Tata Motors Ltd and Sun Pharmaceuticals Industries Ltd.
"The advice shall be regarding sale of the shares held by SUUTI in various companies either through the Offer For Sale (OFS), Block Deal, Bulk Deal, Regular sale through Stock Exchange or any such other mechanism subject to the Securities and Exchange Board of India (Sebi) Guidelines and other applicable Rules and Regulations," the request for proposal (RFP) document said.
Each bidder has been asked to put in a single consolidated bid for the entire SUUTI Holdings and successful bidders will be required to assist and advise the SUUTI in the sale process for each of the said companies individually for a period of three years or until the time such sale gets completed.
While a single consolidated bid is invited for SUUTI Holdings as a whole, the sale process will be carried out individually for the companies comprising the SUUTI Holdings, as decided by the SUUTI from time to time during the period of engagement.
In March 2014, the government sold 9% of its stake in Axis Bank held through SUUTI for over R5,500 crore.
The government has set up an ambitious disinvestment target of R56,500 crore for 2016-17. Of the budgeted target, R36,000 crore is estimated to come from minority stake sale in public enterprises and the remaining R20,500 crore is projected to come from strategic sale in both profit and loss-making companies.
Click here to read our take: SUUTI selloff proceeds rightfully belong to Unit Trust investors