DIPAM Secretary Tuhin Kanta Pandey
The government has no plans to sell its part stake in ITC, held through SUUTI, while BAT is offloading its stake through a block deal in the Kolkata-based FMCG player, a top official said on Wednesday.
As of December 31, 2023, Specified Undertaking of Unit Trust of India (SUUTI) held about 7.82 percent stake in diversified conglomerate ITC.
“There is no such plan at present,” Department of Investment and Public Asset Management (DIPAM) secretary Tuhin Kanta Pandey told PTI.
SUUTI last offloaded stake in ITC in February 2017, when two percent of its equity was sold through a block deal at a price of Rs 291.95 per share.
In a block deal, two parties execute a transaction involving shares worth at least Rs 5 crore. Block deal trades are executed in a separate trading window.
British multinational BAT Plc said on Tuesday it plans to sell up to 3.5 percent of shares in India’s ITC Ltd to institutional investors in a block trade. After this, BAT’s shareholding will drop from 29 percent to 25.5 percent.
In a statement, British American Tobacco Plc (BAT) had said its wholly owned subsidiary Tobacco Manufacturers (India) Ltd (TMI) plans to sell up to 43,68,51,457 equity shares in the Indian diversified entity to institutional investors. of an accelerated bookbuilding process (block trade), subject to the usual closing conditions.
Based on Tuesday’s closing price of Rs 404.25 per share, the value of the total ITC shares planned to be sold by BAT is approximately Rs 17,659.72 crore.
“The block trade shares represent up to 3.5 percent of ITC’s issued ordinary share capital,” the report said, adding that following the completion of the proposed block trade, BAT will remain a significant shareholder of ITC, with a 25 stake .5 percent.
BAT’s initial investment in ITC dates back to the early 20th century and the two companies have a long-standing, mutually beneficial relationship, the statement said. Besides BAT, the other major shareholders of ITC are LIC, FPIs, retail investors, mutual funds and the Specified Undertaking of the Unit Trust of India (SUUTI).
The company said it plans to use the net proceeds from the block trade to buy back BAT shares over a period ending December 2025, starting with 700 million pounds in 2024.
The company will also continue to use operating cash flow to finance investments in its transformation and further reduce debt.
Market analysts said the block deal will be beneficial for ITC shareholders in the long run as it will increase the supply of shares. They also believe that the block deal will marginally reduce the excess supply in ITC.
Shares of ITC were trading at Rs 427.30 during the afternoon session, up 5.70 percent on the BSE.
First print: March 14, 2024 | 12:52 pm IST