Home >News >India >Centre likely to further cut out stake in Axis Bank

The central government is likely to further pare down next month its stake in Axis Bank, held via the Specified Undertaking of the Unit Trust of India (SUUTI), after garnering 600 crore through stake sales in the lender in two tranches.

SUUTI sold 61.43 lakh shares of Axis Bank between 2 and 4 December, which fetched the government 374.21 crore, stock exchange filings show. Last month between 26 November and 27 November, it had sold 36.25 lakh shares for a consideration of 221.47 crore.

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"We sold around 1% of stocks because the stock price was the highest in six months. We will wait for a month or so, if the stock price increases, then we may further cut out stake in Axis Bank," a finance ministry official said under condition of anonymity.

Post the latest stake sale, SUUTI’s shareholding in the Axis Bank is down to 3.92%. It held a 4.33% stake in the bank as of 30 September, stock exchange data shows.

The Parliament bifurcated UTI in 2002, creating SUUTI and UTI Asset Management Co. Pvt. Ltd, the former holding the assured-return investment plans of UTI and the latter overseeing market-linked plans.

The bifurcation took place after UTI’s US-64 investment plan ran into trouble.

SUUTI has minority stakes in bunch of listed and unlisted companies, with most of its value locked in Axis Bank Ltd (11.53% stake), ITC (7.93%), and L&T (1.8%). It had earlier pared down its minority stakes in the Axis Bank and ITC and sold off its stake in L&T.

"So far, the government is not very keen for exiting ITC. It's a political decision," the finance ministry official said.

The government has set a disinvestment target of 2.1 trillion for FY21, including the privatization of Air India and BPCL. So far this year government has garnered 6734 crore through minority stake sales and initial public offering of Mazagon Dock Shipbuilders Limited.

It is, however, yet to carry out any strategic disinvestments so far this fiscal year. Government is confident of closing the BPCL deal this fiscal with three parties expressing interest for the company. While the finance ministry had missed the disinvestment target of 65,000 crore for FY20 by 14,701 crore, it is likely to miss the target again due to the pandemic induced economic downturn.

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