The government expects to raise close to Rs 22.50 Billion (2,250 crore) by selling its 10.27% stake in Maruti Udyog to banks and financial institutions. A floor price of Rs 760 per share has been fixed for sale of government’s residual stake in the automobile giant, marking its final exit from the company after more than two decades.
Once the sale goes through, the government would have netted just short of Rs 50 Billion (5,000 crore) from its stake in Maruti between 2002-2007. Slap on the Rs 10 Billion (1,000 crore) control premium Suzuki paid up and the tally goes up to nearly Rs 6,000 crore.
As many as 36 banks, financial institutions and mutual funds have expressed interest in buying the government’s stake. These include LIC, SBI, Corporation Bank and Union Bank of India, a government official told reporters here on Wednesday.
“We hope to complete the sale by tomorrow,” the official said.The government plans to sell all the 2.96 crore shares (of Rs 5 each) held by it, representing 10.27% stake in Maruti.
Only bids of at least Rs 10 crore will be considered for the oversubscribed sale. Already bids have come in for 3.59 crore shares as against the 29.6 Million (2.96 crore) shares on sale. On Wednesday, Maruti’s shares were trading at Rs 802.05, up by 0.02% from the previous day’s close. According to sources, the bids were to be opened on Wednesday, but the process was postponed since heavy industry minister Santosh Mohan Deb was away. The government had invited expression of interest for the stake sale in February, but deferred the selling due to the volatility in the stock markets.
The government was also awaiting Suzuki’s green signal for allowing LIC to increase its holding beyond 10%. Suzuki has no objection to LIC hiking its stake in the company and the public sector institution would be allowed to participate in the bid, the official said.
LIC holds over 8% stake in Maruti after buying more than half of the shares sold by the government last year. When the government sold 8% stake in Maruti last year, it was stipulated that no financial institution would be allowed to increase its stake beyond 10% through the disinvestment process.This is the third stake sale by the government in the car market leader.
In mid 2003, the government sold 27.5% stake to the public at Rs 125 per share mopping up around Rs 993 crore in the process.This was after the government diluted its stake in the company in May 2002, to hand over control to Suzuki for a premium of Rs 10 Billion (1,000 crore).
Last January, it sold another 8% at an average price of Rs 678.24 a share netting Rs 15.67 Billion (1,567 crore) in the process. Currently Suzuki holds 54.2% stake in the company.
Once the sale goes through, the government would have netted just short of Rs 50 Billion (5,000 crore) from its stake in Maruti between 2002-2007. Slap on the Rs 10 Billion (1,000 crore) control premium Suzuki paid up and the tally goes up to nearly Rs 6,000 crore.
As many as 36 banks, financial institutions and mutual funds have expressed interest in buying the government’s stake. These include LIC, SBI, Corporation Bank and Union Bank of India, a government official told reporters here on Wednesday.
“We hope to complete the sale by tomorrow,” the official said.The government plans to sell all the 2.96 crore shares (of Rs 5 each) held by it, representing 10.27% stake in Maruti.
Only bids of at least Rs 10 crore will be considered for the oversubscribed sale. Already bids have come in for 3.59 crore shares as against the 29.6 Million (2.96 crore) shares on sale. On Wednesday, Maruti’s shares were trading at Rs 802.05, up by 0.02% from the previous day’s close. According to sources, the bids were to be opened on Wednesday, but the process was postponed since heavy industry minister Santosh Mohan Deb was away. The government had invited expression of interest for the stake sale in February, but deferred the selling due to the volatility in the stock markets.
The government was also awaiting Suzuki’s green signal for allowing LIC to increase its holding beyond 10%. Suzuki has no objection to LIC hiking its stake in the company and the public sector institution would be allowed to participate in the bid, the official said.
LIC holds over 8% stake in Maruti after buying more than half of the shares sold by the government last year. When the government sold 8% stake in Maruti last year, it was stipulated that no financial institution would be allowed to increase its stake beyond 10% through the disinvestment process.This is the third stake sale by the government in the car market leader.
In mid 2003, the government sold 27.5% stake to the public at Rs 125 per share mopping up around Rs 993 crore in the process.This was after the government diluted its stake in the company in May 2002, to hand over control to Suzuki for a premium of Rs 10 Billion (1,000 crore).
Last January, it sold another 8% at an average price of Rs 678.24 a share netting Rs 15.67 Billion (1,567 crore) in the process. Currently Suzuki holds 54.2% stake in the company.
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