Government invites bids for 10.27 percent Maruti stake
By siliconindia   |   Thursday, 22 February 2007, 18:30 IST
Printer Print Email Email
NEW DELHI: The Indian government has called for bids for the divestment of its 10.27 percent shares in Maruti Udyog Ltd. The stake of the nation’s biggest carmakeris valued at Rs 26.7 billion. Mutual funds, state-run financial institutions and banks must submit initial offers by 9 March, according to Department of Disinvestment notice issued today. The bids must be for a minimum Rs 100 million. Buyers are expected to line up for the Maruti stake as the compnay controls half the car market in India, said analyst Amit Kasat. India is selling stakes in state-owned companies to benefit from an increase in their share prices and raise money to fund social welfare programs such as education and health. “The response should be very good,” said Kasat, who has a “buy” rating for the stock at Mumbai-based brokerage Motilal Oswal Securities Ltd. “Maruti’s fundamentals are good.” The value of the Maruti stake, amounting to 29.68 million shares, is based on the Rs 900.60 closing price of the shares on the Mumbai stock exchange yesterday. The stock, which rose 46 percent in 2006, fell 2.9 percent this year. The governmenthad raised Rs15.67 billion in January last year selling an 8 percent stake in Maruti to local state-owned banks, insurance and financial companies. The latest stake will be sold through competitive bids by eligible institutions, according to the advertisement. Communist allies of the government that are against selling shares in profitable state-owned businesses haven’t opposed stake sales in companies where the government has small holdings. The Indian government said on 21 December SBI Capital Markets Ltd. and Kotak Mahindra Capital Company Ltd. have been retained as advisers for the stake sale. The government will also have the discretion to sell only a part of the total shares on offer for sale, according to the advertisement.

siliconindia