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UTI-I to sell off stake in unlisted firms
Nimesh Shah & Freny Patel in Mumbai | April 16, 2005 11:22 IST
The specified undertaking of the Unit Trust of India is in talks with investment bankers to sell off its equity holding in about 300-odd companies, most of which are unlisted.
As many of these companies are either under the Board for Industrial and Financial Reconstruction or under litigation, realising value will be very difficult, said senior UTI-I executives.
UTI-I is talking to SBI Capital Markets, ICICI Securities, UTI Securities among a host of other investment bankers.
Many of the unlisted stocks do not carry any value, while some of which are quoted are not doing very well in terms of trading volume. UTI-I hopes to complete the exercise in the next few months, said S B Mathur, administrator UTI-I.
Earlier UTI-I had non-performing assets to the tune of Rs 5,000 crore (Rs 50 billion), which on Friday stands reduced at less than Rs 1,000 crore (Rs 10 billion).
This is largely on account of restructuring of companies in the steel and cement sectors, said Mathur.
The equity holding in the unlisted companies, which are up for sale have been written down in the books of UTI-I's balance sheet at zero value. This means that whatever UTI-I realises through sale proceeds will be added to its profits.
The worry, however, is that the proceeds should more than take care of the merchant banking fees. UTI-I is trying to find out how best the sale can be handled whereby it should not end up giving away more to merchant bankers than actually realising from the sale.
Some of the companies are not performing all that badly as they operate in the steel and cement spectrum, which have seen a turnaround.
"We expect some money will come from these companies," said senior executives. On the other hand, there are about 50 to 60 companies, which are currently under BIFR and others, which are under liquidation. Realising value from these might prove difficult.
Meanwhile, UTI-I has been an aggressive seller in the stock market and has booked around Rs 10,000 crore (Rs 100 billion) in sales.