New Delhi, March 13: The Union government will offload 36 lakh shares in Maruti Udyog Ltd — the country’s largest carmaker — through a public issue that has been slated for June. The shares account for roughly 25 per cent of the company’s equity capital.
“We will be going to the market in June. This is likely to boost the primary market. We have discussed all questions and we are proceeding accordingly,” disinvestment minister Arun Shourie told the Rajya Sabha today.
The initial public offering (IPO) will be one of the largest to hit the market in over two years and is expected to revive a capital market that has been starved of public issues. In 2002-03 (April-January), IPOs raised Rs 983 crore against Rs 1,037 crore in the year-ago period — a far cry from the heady days of the early nineties.
The share selloff is the second stage in the disinvestment process at Maruti Udyog. Last May, the government did not subscribe to a Rs 400-crore rights issue, ceding control over the automaker to Suzuki Motor Corporation (SMC), its joint venture partner. SMC also had to pay a control premium of Rs 1,000 crore.
In the first stage of the Maruti selloff, the government reduced its stake in the joint venture to 45.4 per cent from 49.7 per cent.
Under the terms of the agreement with the government last year, Suzuki has committed to underwrite the entire offering of 36 lakh shares at Rs 2,300 per share.
This means that during a book-building exercise, the floor price will be Rs 2,300. If investors bid above this mark, then Suzuki’s stake will be capped at 54.2 per cent. If the investors balk at that price, Suzuki will pick up the entire IPO for Rs 828 crore at the rate of Rs 2,300 per share. More importantly, it will give Suzuki a 74.2 per cent stake in Maruti. The government is expected to exit the venture altogether by March 2004.
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