Govt. sold 9% stake in Axis Bank via SUUTI & raised Rs. 5500 crore

March 24, 2014

The Central Government sold 42.26 million shares or 9 % of Axis Bank’s share capital through a trust fund, Specified Undertaking of the Unit Trust of India (SUUTI),  by a block deal in a price range of Rs.1,313-1,341 per share.
 Purpose: To garner over Rs.5, 500 crore through the sale of 4.2 crore shares or 9 % stake.

  • The SUUTI hold 20.72 % stake in the bank, offloaded 9 % shareholding through multiple block deals (i.e. largely took place on the Bombay Stock Exchange) and raised around Rs 5,603 crore by selling Axis Bank stake at Rs 1,334 a share.
  • After this stake sale, SUUTI will have a lock-in period of six-month, which means SUUTI can’t sell stake in Axis Bank for six months after this block deal.
  • Bankers for the deal: J P Morgan, Citigroup Global Markets and JM Financial.

Block deal: 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.
Outcome of Axis Bank stake sale held through SUUTI

  • The government raised Rs.5,557 crore i.e. nearly doubles the budgeted amount of Rs 3,000 crore.
  • LIC has emerged as the single largest investor picking up over 85 lakh shares for an estimated 1,116 crore.
  • Other major buyers of the shares viz. Citigroup Global Markets Mauritius, Goldman Sachs Singapore, etc.

The stake sale in Axis Bank was a part of divestment programme of the government in FY14. It is second biggest divestment in FY14 by government after IOC stake sale on March 14, 2014. The government garnered Rs 5,340 crore by selling 5 % stake each in IOC to ONGC and Oil India at Rs 220 a share through off-market transaction.
Note: Axis Bank is the third largest private sector bank of India in which Government of India holds 20.7 % share by assets. The share sale is part of the government’s campaign to raise revenues and meet its revised fiscal deficit target of 4.6 % of Gross Domestic Product (GDP) in the financial year ending on March 31, 2014.

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