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LIC may sell Indal stake to Hindalco

S Ravindran in Mumbai

The Life Insurance Corporation of India is planning to offload its entire 5.64 per cent stake in Indian Aluminium Company to the AV Birla group company Hindalco Industries in the latter's open offer.

Hindalco has a 74.6 per cent stake in Indal.

"We are favourably inclined towards selling our stake in the open offer. A final decision however will be taken only on the last date of the open offer," a senior LIC official told Business Standard. The offer, which opened on October 14, will close on November 12. The offer price is Rs 120 a share.

The fear that Indal may eventually be delisted has prompted LIC to think in terms of selling its stake. "There is no point in remaining a part of a delisted company. Consequently, it makes sense for us to tender our shares in the open offer," the senior LIC executive said. The corporation apprehends that given its already substantial holding in Indal, it will be easy for Hindalco to cross the threshold level of 90 per cent stake.

The public holding in the company is about 8 per cent. The balance 17.5 per cent is distributed among a clutch of banks, financial institutions, insurance companies, foreign institutional investors and mutual funds.

The open offer for Indal is a part of the consolidation of the non-ferrous business of the A V Birla group. The fertiliser business of Indo-Gulf Corporation is being spun off into a separate company. The residual Indo Gulf Corporation including the copper business is being merged with Hindalco.

The open offer was put on hold briefly due to a confusion over the status of Indal shareholders who had originally tendered their shares with Sterlite Industries, during its foiled hostile bid to take over Indal in 1998.

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