Govt Sells 2% SUUTI Stake in ITC for ₹ 6,700 cr
LIC buys the shares at an average price of ₹ 275.85
Mumbai: The government inched closer to meeting its privatisation proceeds target for the fiscal year by selling 2% of its stake held through SUUTI in ITC on a day the cigarette major’s stock surged to a record, ranking second on India’s marketcapitalisation leader-board. The sale, which would fetch the government about ₹ 6,700 crore, comes amidst a 28% increase over the past two months in the share price of Kolkatabased ITC that sells four out of five locally made cigarettes. ITC is considered a major beneficiary of the Budget proposals that raised excise taxes 6% this year, the lowest such increase in six years for the company that relies on tobacco profits to bankroll its packaged foods, cookies, stationery, and hotels businesses. Life Insurance Corp. was the buyer in the transaction in which shares changed hands at an average price of ₹ 275.85 apiece.
Through SUUTI, the government held 11.1% stake in ITC as on December 31, 2016. Shares of ITC rallied as much as 5% in morning trade to hit a record of ₹ 291.95 before ending at ₹ 277.10, up 0.25%. The government aims to raise ₹ 56,500 crore by selling stakes in state-owned enterprises in the current fiscal, out of which ₹ 36,000 crore are earmarked to be raised from minority stake sales and ₹ 20,500 crore from strategic stake sales. However, the government has raised ₹ 37,714 crore so far this fiscal from divestment.
ITC is the second SUUTI sale in the current fiscal after the government sold 1.63% stake in Larsen & Toubro, generating about ₹ 3,100 crore in November.