New Delhi, Nov. 25: The Unit Trust of India has earned Rs 520 crore till September 2002 from block-sales of equity-holdings through open offers.
The mutual fund also participated in buy-back schemes of around eight multinational firms, including Abbot Laboratories, German Remedies, Ciba Speciality and Cadbury.
UTI’s move to sell its holdings through off-counter deals is aimed at meeting its cash flow problems. In fact, it is keen to get the nod from the finance ministry to negotiate more structured buy back sales to top companies as it feels it can safely raise money through this method.
Among firms it is keen to sell off its stake in is the Calcutta-based ITC Ltd.
Though the finance ministry has agreed in principle to UTI’s plan to sell its holdings through this route as they feel it might result in the mutual fund asking for less support from the government, it has not given any formal nod to the process.
Both UTI and government officials argue that Indian companies and MNCs would be only too happy to buy back huge chunks of shares in structured out-of-the-market deals at a suitable premium, given the fact that these could be sources of greenmail for them if released in the open market.
However, Unit Trust refused to sell its holding in software firm CMC in the open bid offered by the Tatas. “It turned out to be a good move as the stock price of CMC rallied sharply following the open offer,” a top UTI official pointed out.
The mutual fund, which recently received a Rs 14,500-crore bailout package from the government, has also offloaded its holding in IPCL in favour of Reliance. The IPCL sale fetched it around Rs 250 crore.
Officials further added that by offloading IBP stocks, the ailing mutual fund earned Rs 95.7 crore. This was followed by offloading VSNL stocks worth Rs 26.3 crore in favour of the Tatas. “Divesting its holdings in the two firms helped UTI earn Rs 120 crore,” the official said.
“UTI had sold 6,17,000 shares of IBP at Rs 1,551.10 a share in the open offer made by the state-run Indian Oil Corporation following its successful takeover,” he said.
Regarding the open offer made by the Tatas for VSNL, he said: “Around 1.9 million shares were tendered in the case of VSNL at Rs 202 a share of which around 1.3 million shares fetched UTI around Rs 26.3 crore.” UTI has also sold its Abbott Laboratories stock in favour of Pharmacia Corporation.