The government is expected to decide the winning bids for the sale of its eight per cent stake in Maruti Udyog Ltd on January 12. A group of ministers on divestment will meet on January 5 to finalise a base price for shortlisting bids.
The offer to sell stake in the country's largest car maker has generated considerable interest among public sector banks and financial institutions. Bank of India is the latest to enter the fray.
"We will decide the quantum of investment after the base price is determined," a Bank of India executive. Life Insurance Corporation, Punjab National Bank and IDBI have already submitted their expressions of interest. At present, only LIC holds a stake (3.31 per cent) in Maruti.
The government will now call for price bids that have to be benchmarked against the listed price. Maruti's latest share price of Rs 645.15 makes the government's eight per cent stake worth Rs 14,911 crore (Rs 149.11 billion).
There is a possibility that the entire eight per cent can go to a single bidder. After the sale, the government will be left with 10.28 per cent stake in Maruti. A large number of public sector banks and insurance companies are expected to participate in the bid, which will close on January 4.
The government holds 52,824,020 equity shares in Maruti, representing 18.28 per cent of the company's equity. Of this, 23,112,804 shares, representing 8 per cent of the equity, are on sale.
Only public sector financial institutions and public sector banks have been allowed to bid. The minimum bid value has been set at Rs 10 crore (Rs 100 million).
The offer also comes with a lock-in period of six months. Kotak Mahindra Capital Company Ltd and SBI Capital Markets Ltd are advising the government on the sale.
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