Global funds hot on Axis Bank share sale

Govt is planning to sell approximately half its 20.72% holdings in Axis, this should get it Rs 5,450 cr

Several global investors, including mutual funds (MFs) and sovereign wealth funds, are vying for a pie of the government’s holdings in Axis Bank, held by Specified Undertaking of UTI (Suuti).

Marquee names, including the government of Singapore, Halbis Capital, T Rowe Price, Capital International, Deutsche Asset Management, Fidelity, Templeton and Aberdeen, have evinced interest on buying a stake in India’s third largest private lender, said sources.

The government is planning to sell approximately half its 20.72 per cent holdings in Axis. This should get it Rs 5,450 crore, based on Tuesday’s closing price of Rs 1,122 for the stock, which fell 3.3 per cent on the day. The stake sale, primarily to institutional investors, could be held in the first week of February, said a person familiar with the matter.

Bankers expect foreign institutional investors (FIIs) to take a larger chunk of the shares on sale. “There is significant appetite for Axis shares among FIIs. Almost 70 per cent of the issue is likely to be subscribed by these,” said the person quoted above.

Some say, though, that this would depend on market sentiment not souring.

Last month, the government had approved Axis’ proposal to raise its foreign investment limit to 62 per cent from 49 per cent. This was aimed to ensure high FII participation as the government struggles to meet its year’s disinvestment target of Rs 40,000 crore before March 31. It has got a little less than Rs 3,000 crore through disinvestments so far this financial year, including Rs 1,637 crore from stake sale in Power Grid Corp recently.

Despite the shortfall, the government does not plan to sell its stakes in other private companies, including Larsen & Toubro (L&T) and ITC, which it holds through Suuti—created in 2002 after UTI was wound up following the US-64 fiasco. Suuti holds 11.54 per cent in ITC and 8.27 per cent in L&T.

Fund managers said the share sale was likely to find more buyers than that of State Bank of India, the country’s largest lender, which opened on Tuesday and is to close on Wednesday.

“Many investors prefer private banks over public sector banks at this juncture because there is still lack of clarity about the quality of books. So, investors are wondering whether they are paying the right price for a public sector bank now,” said a fund manager with a foreign asset management company.