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Bids for MUL stake: Banks, FIs take cautious approach

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Our Bureau

New Delhi, Jan. 11

THE deadline for putting in bids by banks and financial institutions for an 8 per cent stake in Maruti Udyog Ltd (MUL) being divested by the Government ended on Wednesday, with most institutional investors understood to have taken a cautious approach on their bids.

Institutional sources said that they expected most bids to have been made between Rs 630 and Rs 660 per share.

This is against the MUL's closing price of Rs 651 on the BSE, and Rs 653, on the NSE, on the last trading day on Tuesday.

The Government has set a floor price of Rs 620 per share for the disinvestment.

Banks and institutions have held behind-the-scene discussions on the expected bidding pattern that was likely to unfold for the MUL shares.

Bankers said the six-month lock-in period has been one of the main reasons for institutions being cautious on bidding aggressively.

"The bids are likely to be between Rs 630 and Rs 660. Most of us had to be cautious since we had to take a view on what the possible price of the scrip could be six months down the line when we would be allowed to offload them," a banker told

Business Line

.

An Empowered Group of Ministers is due to meet to take a final view on the allotment of the shares.

The MUL offer had elicited expression of interest from 36 potential bidders.

The Government now holds 18.28 per cent of the equity in MUL. Even as the process of divesting 8 per cent of this is on, the Government has been talking of the possibility of completely exiting the company.

(This article was published in the Business Line print edition dated January 12, 2006)
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