Govt sells 2% SUUTI stake in ITC; FY17 divestment goal in sight

Moneycontrol BureauIn early trade Tuesday, the government has divested 2 percent of its stake held in ITC held through the Specified Undertaking of the Unit Trust of India (SUUTI).As per ITC's market capitalization on Tuesday, the 2 percent stake sale should fetch the government around Rs 6,700 crore.ITC shares were trading at around Rs 290 per share, its 52 week high, when the divestment news broke.Through SUUTI, the government now holds 9.1 percent stake in ITC after the sale.With this surprise move, the government is now closer to achieving its FY17 revised divestment target of Rs 45,500 crore. For FY17, the total divestment made via minority stake sale and strategic stake sale stands close to Rs 37,700 croreSUUTI was formed in 2003 as an extension of the Unit Trust of India (UTI). It holds 51 companies -- 8 unlisted and the rest listed companies. Through the undertaking, the government holds minority stake in these companies and often divests its shareholding for capital generation.In the Union Budget announcement last week, the government had revised its disinvestment target for FY17 to Rs 45,500 from Rs 56,500 earlier. For FY18 the government hopes to raise Rs 72,500 crore.Read More: Budget 2017- Govt seeks to raise Rs 72,500 cr via divestment, up 60% YoY
At present the government aims to raise Rs 40,000 crore from minority stake sale and Rs 5,500 crore from strategic sale. With the sale in ITC it has surpassed its strategic sale goal and has now raised around Rs 9,700 crore.

In order to achieve the divestment target for 2016-17, the government had eased rules for merchant bankers managing stake sale of Axis Bank, ITC and L&T by allowing them to enter into a competing transaction with a private company provided they notify SUUTI as and when they enter into any conflict of interest situation.

After today's development, through SUUTI the government holds 12.02 percent stake in Axis Bank, 9.10 percent in ITC and 6.69 percent in L&T. If the government decides to sell its complete stake in these three companies, it can raise around Rs 54677.64 crore as of Tuesday's market cap.