New Delhi, Nov. 10 (PTI): In the absence of the Securities and Exchange Board of India’s (Sebi) approval for a hard underwriting deal, the disinvestment department has decided to go ahead with the sale of the government’s equity in car maker Maruti on the basis of a guaranteed price of Rs 2,300 per share offered by Japanese auto maker Suzuki.
The disinvestment department has commenced ground work for the IPO to be launched in three to four months after disinvestment minister Arun Shourie gave his approval for the soft underwriting option earlier this week, sources said.
Under this option, Suzuki, which earlier this year acquired a majority stake in the auto major through a rights issue, will underwrite the public offering of 25 per cent government equity of 36 lakh shares for Rs 2,300 per share.
Sources added that the department had written to the market regulator seeking its approval for a hard underwriting deal.
However, Sebi held the position that such underwriting would require that institutions guaranteeing the price would have to hold the price level for 60 days post-issue.
The department failed to convince Sebi to waive the clause, thus leading to a situation where merchant bankers were reluctant to underwrite the issue.
The government had in May this year ceded controlling stake in the company by renouncing its share in a Rs 400-crore rights issue to Suzuki Motors for a control premium of Rs 1,000 crore.
It had also agreed to divest its remaining equity of around 45 per cent in two phases, first by paring its equity holding down to 25 per cent by 2003 and selling off the remaining by 2004.
The government also put an option on the remaining equity at a discount of 15 per cent or 10 per cent of market price till April 2004 at the book value of Rs 2,000 or the value prevailing at the time of option whichever is higher.
Suzuki held a 50 per cent stake prior to the first round of disinvestment, the government held 49.74 per cent, while the remaining was held by employees.