The government has no immediate intentions to divest its share in ITC, held through SUUTI, despite British American Tobacco (BAT) reduced its stake through a block deal in the Kolkata-based FMCG company, according to senior officials quoted by PTI.
As of December 31, 2023, the Specified Undertaking of Unit Trust of India (SUUTI) maintained approximately a 7.82% stake in the diversified conglomerate ITC.
“There are currently no such plans,” stated Tuhin Kanta Pandey, Secretary of the Department of Investment and Public Asset Management (DIPAM), to PTI.
SUUTI previously reduced its stake in ITC in February 2017, selling 2% equity at ₹291.95 per share through a block deal.
BAT Plc announced on Tuesday its intention to sell up to a 3.5% stake in India’s ITC Ltd to institutional investors via a block trade. This move would reduce BAT’s ownership from 29% to 25.5%.
In a statement, BAT revealed that its subsidiary, Tobacco Manufacturers (India) Ltd (TMI), plans to sell around 43,68,51,457 ordinary shares in ITC through an accelerated bookbuild process. This transaction, subject to customary closing conditions, is valued at approximately ₹17,659.72 crore based on Tuesday’s closing price of ₹404.25 per share.
BAT emphasized its longstanding relationship with ITC, dating back to the early 1900s, and assured that it would remain a significant shareholder post the transaction. Alongside BAT, ITC’s key shareholders include LIC, FPIs, retail investors, mutual funds, and SUUTI.
The net proceeds from the block trade will be utilized by BAT to repurchase its shares until December 2025, commencing with £700 million in 2024. Additionally, BAT will continue to allocate its operating cash flow towards its transformation and further deleveraging.
Market analysts view the block deal as advantageous for ITC shareholders in the long term, expecting it to alleviate supply concerns. This sentiment is reflected in ITC’s shares trading at ₹427.30 in the afternoon session, marking a 5.70% increase on the BSE.