Axis Bank shares fall from recent peak as government announces exit

The Specified Company of Unit Trust of India (SUUTI) is selling its 1.5% stake in Axis Bank. This is how the street reacted

Axis Bank’s share price fell on Thursday, November 10, returning to the closing high reached the day before. The fall follows the government’s decision to leave India’s fifth largest lender by market value with the sale of its 1.55% stake.

In Thursday’s trade, shares of Axis Bank fell 3.5% to Rs 843 on BSE after closing at a high of 874.35 on Wednesday.

The downward trend follows the announcement of plans to sell 4.65 crores of shares representing a 1.55% stake in Axis Bank by the specified company of the Unit Trust of India (SUUTI), which is under the Union Government.

The government will sell the stake at Rs 830.63 per share, a 5% discount from Wednesday’s closing price, according to a regulatory filing. The total stands at around Rs 3,865 crore. With this sale, the government would exit the private sector lender altogether.

Bain Capital, which sold a 1.24% stake via a block deal on Nov. 1, still owns a 3% stake in Axis Bank. If the former wants to unload more participation, he can only do this after a cooling period of three months or 90 days. The floor price of Bain Capital’s block deal was Rs 888 per share.

In 2017, Bain Capital took a 4.8% stake in Axis Bank for Rs 6,854 crore.

As the sale of the government’s stake in Axis Bank begins on Thursday, non-retail investors can place their bids on the same day, while only retail investors will be allowed to bid for the shares on Friday.

ICICI Securities Limited, Citigroup Global Markets India Private Limited and Morgan Stanley India Company Private Limited are the stock brokers. ICICI Securities is acting as settlement broker, pursuant to the filing.

Meanwhile, amid buzz over the fate of SUUTI’s stake in ITC, the trust has made it clear that there are no plans to sell more stakes in the diversified conglomerate. As of September 2022, SUUTI held a 7.87% stake in ITC, which at the company’s current market price would be valued at Rs 34,140 crore.

SUUTI last reduced its stake in ITC in February 2017, when 2% of the shares were sold at Rs 291.95 per share. The number of shares held by SUUTI in ITC has remained constant over the past four years.

Carol N. Valencia