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India to raise $50 bn by selling stake in ITC, L&T, Axis Bank through ETF

New Delhi: India plans to raise around 50 billion rupees ($813.4 million) this fiscal year by selling stakes in companies including ITC, Larsen & Toubro and Axis Bank, a senior official with knowledge of policymakers' discussions said on Wednesday.

The sales could be made through an exchange traded fund that could be launched before the end of March, the official told Reuters, requesting anonymity as he is not authorised to speak to the media.

The ETF would be made up of the government's stakeholdings in up to ten companies, including stakes in companies held through an offshoot of the Unit Trust of India known as SUUTI.

The government holds 11.27 percent in ITC, 8.18 percent in L&T and 11.66 percent in Axis Bank through SUUTI.

SUUTI, which stands for Specified Undertaking of The Unit Trust of India, said in a statement that it has invited bids from asset management companies to help it set up the ETF.

"The size of the ETF could be about 50 billion rupees though the final decision would be taken in consultation with the asset management company," the official said.

Last month, Arvind Mayaram, finance secretary at the finance ministry, said that the government was considering floating an ETF to sell shares held by SUUTI.

Earlier this year, the government sold a 9 percent stake in Axis Bank to instituional investors.

In his maiden budget in July, Finance Minister Arun Jaitley set a target of 584.25 billion rupees ($9.5 billion) to be raised through the sale of shares in state-run companies and minority stakes in private companies.

In March, the government raised 44 billion rupees through another ETF comprising shares of 10 state-run companies including ONGC , Indian Oil and Coal India .

Reuters

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Updated Date: Oct 08, 2014 16:03:11 IST