The government on Tuesday plans to hit the market with an offer for sale (OFS) for offloading its stake in Axis Bank that it holds through the Specified Undertaking of Unit Trust of India (SUUTI).
SUUTI plans to sell up to 50.7 million shares representing 1.98 per cent of the total paid-up equity share capital of the private lender at a face value of Rs 2 each.
There is an oversubscription option, whereby an additional 26.3 million shares will be up for sale.
If the entire 3 per cent stake is sold, the government would raise over Rs 5,300 crore.
Axis Bank informed the stock exchanges of the sale after Monday’s market hours.
The offer will take place on a separate window of the stock exchanges on February 12 (T day) and February 13 (T+1 day).
Ten per cent of the offer size will be reserved for retail investors, while 25 per cent of the shares will be reserved for mutual funds and insurance companies.
ALSO READ: Axis Bank needs to be conservative on corporate loans: CEO Amitabh Chaudhry
Non-retail investors can place their bids only on T day (February 12). While placing their bids, non-retail investors may indicate their willingness to carry forward their unallotted bids to the following day for allocation to them in the unsubscribed portion of the retail category.
Non-retail investors, who have placed their bids on Tuesday and have chosen to carry forward their unallotted bids to the next day, shall be allowed to revise their bids on Wednesday, according to the OFS guidelines.
Retail investors — defined as those who place bids for shares of a total value of not more than Rs 2 lakh — will be allowed to place their bids on February 13.
ALSO READ: Axis Bank Q3 net profit surges 131% to Rs 1,681 crore, beats estimates
The floor price for the offer will be Rs 689.52 per equity share of the company, 2.9 per cent less than Monday’s closing price of Axis Bank shares of Rs 710 apiece on the BSE.
As on December 31, 2018, SUUTI held around 9.29 per cent stake in Axis Bank, 7.96 per cent in ITC, and 1.77 per cent in Larsen & Toubro (L&T).
According to reports, the government is waiting for L&T to launch a buyback offer to tender its shares.
Analysts believe Axis Bank’s financials are improving as the pool of stressed assets of restructured assets and corporate loans rated ‘BB’ and below have been on a decline.
ALSO READ: Axis Bank eyes major turnaround as retail, SME drive growth, slippages fall
“The current pool of stressed assets stands at 2.4 per cent of the loan book. Slippages are likely to see a declining trend ahead, but still far from normalcy. Credit growth across segments has seen a pickup with decent traction in current and savings account deposits. Management is guiding net interest margin to stabilise and start improving marginally,” observed a report by IDBI Capital.
Axis Bank saw change of guard with Amitabh Chaudhry replacing Shikha Sharma as managing director and chief executive officer on January 1, 2019.