Business

India Raises $995 Million From Stake Sale in ITC

A man talks on his mobile phone as he walks past an ITC office building in Kolkata September 4, 2012. REUTERS/Rupak De Chowdhuri/Files

A man talks on his mobile phone as he walks past an ITC office building in Kolkata September 4, 2012. Credit: Reuters/Rupak De Chowdhuri/Files

Mumbai/New Delhi:  India has sold a 2% stake in consumer goods and cigarettes maker ITC Ltd, raising about Rs 67 billion ($995 million) for the government, three sources with direct knowledge of the deal said on Tuesday.

State-owned Specified Undertaking of Unit Trust of India (SUUTI), which owned 11.12% of ITC as of end-December, pared the stake via block deals in the market, the sources said.

Life Insurance Corp (LIC), which typically invests heavily in government divestments, bought the stake, the sources added. While LIC is fully owned by the Indian government, its financials are independent of the government’s budget.

ITC shares rose as much as 5.5% in early trade to a record high of Rs 292.15 after news of the sale.

Neeraj Gupta, the top bureaucrat looking after state stake sales, confirmed a deal had happened, but declined to give details. India plans to raise Rs 455 billion from asset sales in the year to March to help fund its fiscal deficit.

Excluding the ITC stake sale, the government has raised about 310 billion rupees this fiscal year, including a Rs 31 billion sale by SUUTI in engineering group Larsen & Toubro.

The ITC shares were sold at an average price of Rs 275.85, one of the sources said, which is 0.3% lower than the stock’s Monday closing price of 276.80 rupees.

ITC shares were up 0.5% as of 11:20 am IST, versus a 0.32% fall in the broader NSE Nifty.

ITC shares have rallied around 8% over the past week, buoyed by the government’s announcement of a smaller-than-expected hike in excise duties on some cigarette categories.

(Reuters)