DIPAM secretary Tuhin Kanta Pandey

The government has no plans to sell its part stake in ITC, held through SUUTI, amid BAT paring its stake through a block deal in the Kolkata-based FMCG player, a top official said on Wednesday.

As on December 31, 2023, Specified Undertaking of Unit Trust of India (SUUTI) held around 7.82 per cent stake in the diversified conglomerate ITC.

“There is no such plan at the moment,” Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey told PTI.

SUUTI last pared a stake in ITC in February 2017, when two per cent equity was sold at a price of Rs 291.95 per share via block deal.

In a block deal, two parties make a transaction involving shares worth at least Rs 5 crore. Block deal transactions are conducted in a separate trading window.

British multinational BAT Plc on Tuesday said it plans to sell up to 3.5 per cent stake in India’s ITC Ltd to institutional investors through a block trade. Following this, the shareholding of BAT will come down to 25.5 per cent from 29 per cent.

In a statement, British American Tobacco Plc (BAT), had said its wholly-owned subsidiary Tobacco Manufacturers (India) Ltd (TMI) intends to sell up to 43,68,51,457 ordinary shares in the Indian diversified entity to institutional investors by way of an accelerated bookbuild process (block trade), subject to customary 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 around Rs 17,659.72 crore.

“The block trade shares represent up to 3.5 per cent of ITC’s issued ordinary share capital,” it said, adding, that following the completion of the proposed block trade, BAT will remain a significant shareholder of ITC, with 25.5 per cent holding.

BAT’s initial investment in ITC dates back to the early 1900s and the two companies have a longstanding, mutually beneficial relationship, the statement said. Besides BAT, ITC’s other key shareholders are LIC, FPIs, retail investors, mutual funds, and the Specified Undertaking of the Unit Trust of India (SUUTI).

The company said it intends to use the net proceeds of the block trade to buy back BAT shares over a period ending December 2025, starting with 700 million pound in 2024.

It will also continue to allocate operating cash flow to fund investment in its transformation and to further deleverage.

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 the block deal will marginally reduce a supply overhang in ITC.

Shares of ITC were trading at Rs 427.30 in the afternoon session, up 5.70 per cent on the BSE.

First Published: Mar 14 2024 | 12:52 AM IST

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