The Telegraph
Saturday , March 22 , 2014
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Selloff kitty set to top target

New Delhi, March 21: The government looks set to surpass its pruned divestment target of Rs 19,000 crore for the current fiscal.

Top North Block officials said the government would raise over Rs 21,412 crore from divestment by the end of this fiscal.

The officials said SUUTI’s stake sale in Axis Bank through a block deal was expected to raise more than Rs 5,600 crore, bolstering their hopes.

The Centre sold 4.2 crore shares of Axis Bank at an average price of Rs 1,325 apiece.

On the bourses, the Axis Bank stock was the most heavily traded. Though the stock fell more than 3 per cent in early trade, it recouped later, gaining 2.7 per cent to close at Rs 1,393.40 on the BSE.

Stock market circles said there was a strong response from institutional investors to the Axis stake sale. Data available from the BSE showed Life Insurance Corporation was one of the largest buyers, purchasing more than 85.45 lakh shares for Rs 1,122 crore at an average of Rs 1,313.25 apiece.

Citigroup Global Markets bought 38.23 lakh shares at Rs 1,316.13 per share, while Goldman Sachs purchased 23.50 lakh shares for Rs 1,323.57 apiece. New World Fund bought around 26.88 lakh shares.

“A positive element of these transactions was not only that they elicited a good response, but also the pricing, which came towards the higher end of the band,” an analyst said.

Though details of the remaining shares purchased on the NSE were not available, brokers said both domestic and foreign institutions made small buys.

Till now, the department of divestment had raised around Rs 12,812 crore through minority equity offerings in companies such as IOC, Bhel, NHPC, PowerGrid and Engineers India. It is looking to raise another Rs 3,000 crore from the newly launched exchange traded fund of central public sector enterprises.

The government had earlier set a divestment target of Rs 40,000 crore but had to scale it down after the markets hit a low patch and several divestments, including mega sale offers in Coal India and Steel Authority of India Ltd, met with stiff opposition.

Residual stake sales in Hindustan Zinc and Balco also failed to make much headway despite in-principle agreements, possibly to stave off controversy ahead of the elections. The government had targeted around Rs 14,000 crore from these two residual stake sales but they had been deferred to the next fiscal.

Finance minister P. Chidambaram had been on the board of Anil Agarwal-run Vedanta and had resigned just before he became the finance minister in UPA-I. Since then there have been allegations that the finance ministry has been soft towards Vedanta, which was keen to buy out the government’s residual stakes.

Officials said the Axis stake sale was the biggest divestment bid in this fiscal. “The second big was IOC, which fetched around Rs 5,340 crore. The other big ones were Bhel, which mopped up Rs 1,886 crore, NHPC (Rs 2,131 crore) and PowerGrid (Rs 1,637 crore),” said top officials.

In the new fiscal, the government wants to start working on the Coal India selloff. Though officials said they expected to start work in April, most analysts did not expect much headway ahead of the general elections slated for April-May.