The Specified Undertaking of UTI (SUUTI) is planning to sell its entire 17% stake in Stock Holding Corporation of India (SHCIL), according to two senior officials involved with the process.
SUUTI is expected to net around Rs 300 crore through this stake sale, a person involved with the transaction told ET. “The offer will be made first to the existing shareholders of the company (SCHIL),” the official said.
However, according to senior bankers it is very unlikely that the existing shareholders may buy SUUTI’s stake.
“Even the other key promoters may consider offloading their stake in SHCIL,” said another investment banker.
SHCIL is jointly promoted and owned by banks and financial institutions like IDBI Bank, ICICI Bank, SUUTI, IFCI, LIC and GIC.
The investment bankers acting as advisors to SUUTI are likely to meet the other shareholders within the next couple of weeks. Based on the feedback, the SUUTI board will meet to decide on the stake sale.
SCHIL is India’s leading custodian and depository participant having a strong base of customers across both institutional and retail investors. For the financial year ended March 31, 2009, SCHIL had clocked a total income of Rs 227 crore and a net profit of Rs 66.4 crore.
The company also distributes financial products like mutual funds and IPOs through its retail network.
Last month, SUUTI sold 9.42% of its 25% equity stake in National Securities Depository to the National Stock Exchange for close to $25 million, valuing the depository firm at roughly $250 million or over Rs 1,000 crore.
SUUTI was formed well over six years ago after the erstwhile UTI was bifurcated in 2003-04, following a massive erosion in the reserves of its flagship scheme US-64.
All the schemes run by UTI based on the net asset value (NAV) were transferred to the newly-formed UTI AMC while the assured return schemes and other assets and liabilities were transferred to another entity, SUUTI. The objective being that once all the liabilities to the unitholders were extinguished, the undertaking could be wound up.
While all the schemes have been redeemed, some of the assets in the form of the shareholdings in companies like Axis Bank, L&T and ITC are yet to be sold. Besides, it also has investments in several unlisted companies.
The stake sale in SCHIL is significant in the context of the recently set-up a Sebi committee under the chairmanship of former Reserve Bank of India (RBI) governor Bimal Jalan to review issues related to ownership and governance of market infrastructure institutions. The committee, chaired by the former RBI governor, will cover stock exchanges, depositories, custodians and registrars, among other market intermediaries.
Source: Economic Times