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Open offers, buybacks sources of 'big relief' for UTI

BS Markets Bureau

Unit Trust of India actively participated in the divestment-related open offers and buybacks during the fiscal ended June 2002. UTI was engaged in almost all open offers of public sector undertakings.

A senior UTI official said "aggressive bidding by companies in the recent divestment programme has come as a big relief" for the trust, which has been grappling with shortfalls in some of its assured schemes.

Apart from the divestment, UTI also participated in eight buybacks of multinationals. The exact figures are not available on the profit made from these deals, but sources recently said UTI sold around Rs 20 billion equity in the open offers.

The market value of investible assets was down 13.14 per cent at Rs 495.60 billion for the year ended June 30, 2002, compared with Rs 570.60 billion for last fiscal, according to provisional data available.

UTI had bid aggressively in the IBP divestment. It had tendered 1.2 million equity shares or 5.32 per cent of the total equity of IBP for Rs 1,551.10 a share in the 20 per cent open offer made by Indian Oil Corporation following its successful takeover.

Of these, 617,000 equity shares were accepted in the open offer, fetching the fund a whopping Rs 957 million. A UTI official said, "Among the recently divested, IBP has provided the highest return to UTI."

Apart from IBP, it has also participated aggressively in the open offer of Videsh Sanchar Nigam Ltd made by the Tatas. "However, in the case of VSNL, a couple of UTI schemes didn't tender the entire chunk of their holding," the official said.

"About 1.9 million shares were tendered in the case of VSNL at Rs 202 a share and around 1.3 million shares were accepted," the official said. UTI fetched around Rs 263 million through the open offer.

In the case of CMC, not a single equity share was tendered by UTI in the open offer done by the Tatas and it turned out to be a good move as the stock price of CMC rallied sharply following the open offer.

While in the case of IPCL, UTI is expected to offer a big chunk or even the entire chunk of holding in the open offer made by Reliance. UTI holds around 9 per cent of the equity capital or around 23 million equity shares.

UTI also participated in various buybacks. It has sold 2,41,749 of Abbott Laboratories at Rs 245 a share to Pharmacia Corporation, US against their buyback offer. While it sold 14,51,980 equity of GKN Driveshafts (India) Ltd at Rs 55 a share to GKN Automotive GmbH and GKN Plc.

Further, UTI sold 2,11,396 shares of Indian Resort Hotels at Rs 70 a share through the buyback offer. It has also participated in the buybacks of XLO India, Cadbury India, Foseco India and Mico last fiscal.

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