Govt Sells 2% SUUTI Stake in ITC for ₹ 6,700 cr

LIC buys the shares at an av­er­age price of ₹ 275.85

The Economic Times - - Companies: Pursuit Of Profit -

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.

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