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PSUs eye Maruti 'stake' sale

Govt's decision to sell 8% of the 52,824,020 shares it holds in Maruti has generated interest among all the 28 PSU and six state-owned insurance companies.

autos Updated: Jan 03, 2006 12:11 IST

The government's decision to sell 8 per cent of the 52,824,020 shares it holds in Maruti has generated interest among all the 28 public sector banks and six state-owned insurance companies, which look at it as a chance to acquire a sizeable stake in the auto major for an attractive price.

"The offer by the government to sell eight per cent shares in Maruti has evoked strong interest among all the eligible public sector financial institutions," industry sources said.

The financial institutions see the offer of sale as an opportunity to acquire a large number of shares of a well performing company at an attractive price.

"If an institution had tried to acquire bulk shares of Maruti in the market, it would have jacked up the prices of the company's shares. They see (the offer for sale) as a good opportunity to acquire a sizeable stake in the company," sources added.

The PSU institutions have to submit their expressions of interest for the government's 8 per cent stake by January 4.

The government is expecting the financial institutions to bid agressively for the Maruti shares. If the bids are not up to the government's expectations even if they are above the indicative price, the government has reserved the right to not sell all the 23,112,804 equity shares on offer.

The shares comes with a lock-in period of six months.

After the EoIs are received and examined by the government, financial bids would be called.

The indicative price would be fixed on the basis of the price of the Maruti shares on the stock exchanges. The company's shares gained Rs 8.65 to close at Rs 645.15 on Monday.

The government has kept the minimum bid value at Rs 10 crore and a single institution can bid for all the shares on offer.

However, it has said that the present holding of the institution in Maruti and shares transferred from government to it should not exceed 10 per cent equity of MUL on the date of such transfer.

At the time of submission of bids, institutions have been asked to disclose their exact shareholding in the company.

SBI Capital Markets Ltd and Kotak Mahindra Capital Company Ltd are advising the government on the transaction.

First Published: Jan 02, 2006 19:07 IST