In a last-minute rush to meet the revised disinvestment and fiscal deficit targets before the year ends, the government successfully offloaded a 9% stake in Axis Bank held by the Specified Undertaking of Unit Trust of India (SUUTI), helping the exchequer raise Rs 5,600 crore on Friday.
Separately, the Centre raised Rs 4,000 crore via the CPSE exchange-traded fund (ETF) with the issue getting oversubscribed on Friday.
After the Axis Bank deal and the CPSE ETF, proceeds from disinvestment have exceeded the FY14 revised estimates by about Rs 3,800 crore as on Friday. The revised estimate from stake sale in PSUs and residual stake sale in non-government companies was Rs 19,027 crore, and by Friday evening, the government had earned Rs 22,856 crore.
However, government sources told FE that the Centre will refund any amount above Rs 3,000 crore from the CPSE ETF, which comprises scrips of 10 state-owned companies, namely ONGC, Coal India, GAIL, REC, Oil India, Container Corp, Power Finance Corp, Indian Oil, Engineers India and Bharat Electronics.
?So far, we have received about R4,000 crore. But we have a provision for this ETF where we will have to refund any amount over Rs 3,000 crore. Hence, we will refund the balance amount,? a finance ministry official said.
The government sold 4.22 crore shares in Axis Bank ? the third largest private sector lender by assets ? held by various schemes of the SUUTI via the block trading facility on stock exchanges at an average price of Rs 1,315.193 per share.
?There was massive participation from foreign institutional investors (FIIs) in the Axis Bank deal. This includes the likes of global long-only funds who have tremendous faith in the fundamentals on the bank,? a person familiar with the deal said on conditions of anonymity.
Life Insurance Corporation of India (LIC) reportedly bought Axis Bank shares worth Rs 1,122.37 crore, showed bulk/block deal data available on the BSE. The insurance behemoth purchased 85.46 lakh shares at a price of Rs 1,313.25 per share.
Other prominent buyers include Citigroup Global Markets Mauritius (38.23 lakh shares for Rs 503.19 crore), Goldman Sachs Singapore (23.5 lakh shares for Rs 311.03 crore) and New World Fund (26.88 lakh shares for Rs 353.50 crore), BSE data showed. Block deal is a trade with a minimum quantity of 5 lakh shares or minimum value of Rs 5 crore executed through a single transaction on this separate window of the stock exchange.
SUUTI, formed in 2003 and an offshoot of erstwhile UTI, held 20.72% in Axis Bank as on quarter ended December 2013. Pursuant to the deal, SUUTI?s holding will come down to 11.72%.
Investment bankers privy to the deal said there will be a six-month lock-in period following the share sale on Friday. Citigroup Global Markets, JM Financial and JPMorgan were appointed lead managers to the Axis Bank auction.
The Axis scrip Bank recovered intraday losses and ended 2.7% or R36.55 higher at Rs 1,393.40 a share on the BSE. The stock has touched a high of Rs 1,549 and a low of R764 in the last 52 weeks.
The Centre raised Rs 5,340 crore by selling 10% of its stake in the Indian Oil Corporation (IOC) to Oil India (OIL) and Oil & Natural Gas Corp (ONGC) via an off-market transaction. In the beginning of March, the government raised Rs 1,889 crore by selling 4.6% stake in BHEL to LIC. The revised estimates also include Rs 6,027 crore from stake sale in eight PSUs through the follow-on public offering route.
The FY14 budgeted estimate for disinvestment was Rs 54,000 crore, which included Rs 40,000 crore from stake sale in PSUs and Rs 14,000 crore from residual stake sale in Hindustan Zinc and Balco, both of which are majority owned by Vedanta Resources. However, this proved to be an uphill battle for finance minister P Chidambaram.
There was stiff opposition from all companies and ministries concerned. The oil ministry and the heavy industries ministry did not want to sell stake in Indian Oil and BHEL on the open market, citing weak share prices. Hence, the stake was picked up by other PSUs.
The biggest disappointment was Coal India, from which the Centre was planning to raise about R20,000 crore through a 10% stake sale. Its unions opposed any sort of stake sale, ultimately forcing the company’s board to pay its highest ever special dividend of R18,317 crore, of which the government received R16,485 crore.
After a lot of procedural delays, the sale of 26% stake which the government holds in HZL and the 49% stake it has in Balco, was postponed to FY15.
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