Govt to offload 5% equity in BHEL to raise Rs 4,500 cr

The government is likely to divest 5% equity in state-owned engineering giant Bharat Heavy Electricals (BHEL) as part of the exercise to raise Rs 40,000 crore from disinvestment during the current financial year.

The stake sale in BHEL is likely to yield the government about Rs 4,500 crore at existing market prices.

"The board of the company has recommended the disinvestment of 5% of the paid-up equity of BHEL out of the government of India's shareholding," BHEL said in a filing to the Bombay Stock Exchange (BSE).

The government currently holds 67.72% equity in BHEL, which will come down to 62.72% following the disinvestment.

The company further said that 10% of the equity to be offloaded under the disinvestment programme would be reserved for employees.

BHEL, meanwhile, has also decided to split its equity shares of Rs 10 face value into five equity shares of Rs 2 each.

Shares of BHEL fell by over 7% to Rs 1,923.8 on the BSE today.

During the current fiscal, the government has already raised Rs 1,162 crore through the divestment of a 5% stake in Power Finance Corporation in May. A follow-on public offer by SAIL is likely to hit the market next month and another issue by ONGC in July.