Maharashtra govt may offload stake in Sicom

International Finance Corporation and DEG eye stake in company.

The Maharashtra government is open to reducing its stake in the State Industrial Corporation of Maharashtra (Sicom), if it gets a good value.

Sources in the state industry ministry said: "It is a very sensitive issue to talk about now and things are at a pre-mature level. A high-power committee has been set up for this purpose and will look into it when the proposal comes in.

From a personal view, anybody will sell their stake if they get a good value for their shares but from the state government's perspective, there are several other issues it has to consider before taking such a decision."

It is learnt that if the state government agrees to bring down its stake in Sicom, SU-UTI, which holds 36.5 per cent in the corporation, may offload its stake in two stages. SU-UTI floated a tender for selling its stake in Sicom early last week.

Sources close to the development said negotiations were on, though things were at a preliminary stage.

If the state government brings down its stake, SU-UTI will also get a good value. This proposal, it was learnt, was discussed with the industry ministry officials.

The move follows a realisation that a foreign buyer may not be willing to offer a good price if the state government continues to maintain a majority holding in Sicom.

At present, the Maharashtra government holds 49 per cent in Sicom, followed by SU-UTI. Another 3.5 per cent stake is being held by UTI AMC.

It is learnt that International Finance Corporation (IFC), the private equity venture of the World Bank, and DEG, one of the largest European development finance institutions, are eyeing a stake in Sicom and have approached the investment banker appointed by SU-UTI for the divestment.

The sources said the tender had received a good response so far.

Standard Chartered Private Equity (SCPE), Lehman Brothers, Temasek and a couple of hedge funds may also be interested in picking up a stake in Sicom.

Sicom posted a net profit of Rs 33.98 crore for 2005-06, up 69 per cent, from Rs 20.15 crore in the previous year.