Govt may lower SUUTI stake in Axis Bank by 0.7% to raise up to Rs 1,300 cr

It waited six months for the stock to touch Rs 600, and then took a call to offload stake. However, decision to lower stake in Axis Bank was taken last year

The government may cut 0.4-0.7 per cent more stake in Axis Bank held through Specified Undertaking of the Unit Trust of India(SUUTI), if the current upward movement in the private lender's stock continues, according to a key official.

The government, through SUUTI, has already lowered its stake in Axis Bank from 4.24 per cent on November 26 to 3.92 per cent as on December 4.

The government plans to lower its stake held through SUUTI in India’s third-largest private sector bank by 0.7-1 per cent. The government has already sold over 0.3 per cent stake in the lender and mopped up Rs 595 crore. An additional stake sale of 0.4-0.7 per cent will help it mop up around Rs 800 crore to Rs 1,300 crore.

 The government waited for six months for the stock to touch Rs 600-levels, and then took a call to offload its stake, the official said. However, the decision to lower the stake in Axis Bank was taken last year, the official said.

Shares of Axis Bank had hit a 52-week low of Rs 285 on March 25, 2020, and since then recovered to close at a little over Rs 620 on Tuesday.

The transaction will help the government mop up some divestment receipts at a time when the Covid-19 pandemic has derailed its divestment programme, and strained its revenues. The ambitious exercise of privatising public sector enterprises is not expected to get completed this financial year; the government has set itself a target of Rs 2.1 trillion from divestment. Of this, Rs 90,000 crore was expected from share sales and big-ticket privatisation like that of Bharat Petroleum Corporation, and the remaining Rs 1.1 trillion through an IPO of LIC and stake sale in IDBI Bank.

So far, the governmenthas garnered Rs 6,533 crore through offers for sale, share buybacks, and initial public offerings.