12 merchant banks apply to manage SUUTI stake sale

According to sources, department of investment and public asset management will select up to six banks for managing the sale

As many as 12 merchant banks have bid for stake sale by the government in various companies held through the Specified Undertaking  of UTI (SUUTI).

The department of investment and public asset management will invite these to make presentations and then select up to six for managing the sale, sources said. The selected merchant bankers will manage SUUTI stake sale for three years or till the last stake sale is completed, whichever is earlier.

According to the recently relaxed norms, merchant banks managing the sale of government stake in Axis Bank, Larsen & Toubro (L&T) and ITC, held through SUUTI, may enter into a competing transaction with a private company, provided they notify SUUTI as and when they enter into any such potential conflict of interest. However, for that phase, the bankers will not be considered for managing the sale in these three companies.

Earlier, merchant banks were not permitted to enter into any competing transaction for the entire three years for which they are being hired. Banks had approached the department to modify this and the rules were loosened for banks that would manage the sale of government stake in the three ‘Group A’ companies — Axis Bank, L&T and ITC.

“As and when the merchant bankers get into a conflict of interest related to any one of these companies, they have to notify SUUTI and will not be considered for selection for a particular transaction,” SUUTI had said. When out of the conflict situation, too, they must tell SUUTI.

A complete stake sale in these three companies could fetch the exchequer about Rs 64,000 crore, at Wednesday’s closing price.

SUUTI, offshoot of the erstwhile Unit Trust of India,  has investments in 43 listed and eight unlisted companies. These have been classified into three groups. Group A comprises   Axis Bank (11.53 per cent stake), ITC (11.17 per cent) and L&T (8.16). Group B comprises the eight unlisted ones, where SUUTI has all the stake. Group C consists of the 40 listed entities.