The floor price has been fixed at Rs 760 a share. As many as 296,79,709 shares of Rs 5 each would be sold through the competitive bidding route to domestic public sector financial institutions, public sector banks and mutual funds.
Official sources said the government expected a healthy premium over the floor price. The transaction is likely to be completed shortly, they added. At this floor
price, the stake sale is expected to raise a minimum of Rs 2255 crore (Rs 22.55 billion) for the government. As many as 39 leading public sector financial institutions, public sector banks and mutual funds have expressed interest in picking up the stake.
These include LIC, State Bank of India and its associates, IDBI, GIC and Canara Bank among others. In setting the floor price at Rs 760, the empowered group of ministers took the 10-day average price and discounted it by 4.86 per cent.
The advisors to the sale, SBI Capital Markets and Kotak Mahindra Capital Company, had recommended a floor price of Rs 730 taking the five-day average price discounted by 7.2 per cent, official sources said.
This will be the third and last such sale of the government's equity in the company. In June 2003, the government sold 27.5 per cent stake to the public at Rs 125 a share, netting Rs 993 crore (Rs 9.93 billion).
In January 2006, it sold another eight per cent to public sector banks and financial institutions at an average price of Rs 678.24 a share, mopping up Rs 1,567 crore (Rs 15.67 billion). Suzuki holds 54.2 per cent stake in the company.
The decision to sell its remaining equity in MUL was cleared by the Cabinet Committee on Economic Affairs on December 21 last year. Subsequently, on February 22 this year, the government invited expressions of interest for selling the shares.
At the time of inviting interest, the government had said that no institution would hold more than 10 per cent of the total paid up capital of the company. However, it later decided to relax this condition on a case-by-case basis.
