Government revises RFP selling 60,000 crore worth blue chip holdings of SUUTI

NEW DELHI: The disinvestment department has issued a revised request for proposal (RFP) inviting application from merchant bankers for selling more than Rs 60,000 crore worth of shares it holds in many of India’s blue chip companies through the Specified Undertaking of Unit Trust of India (SUUTI).

The conflict of interest clause in the earlier RFP had raised some concern among the 13 merchant bankers, advisers and selling brokers that had shown interest in the offer.

The revised RFP takes care of these concerns and also would increase the number of intermediaries to be selected to six from three, a senior official said. "There has been good a response.

Some of the applicants shared their concerns over the existing norms on conflict of interest. The new request for proposal issued takes care of these concerns," he said.

Under the new RFP issued merchant bankers need not inform SUUTI about conflict of interest situation during the selection stage.

SUUTI has stakes in 43 listed and eight unlisted companies including ICICI Bank, Bharat Petroleum, Hindustan Unilever, Titan, and Reliance Industries. Its biggest holdings in individual companies are 11.66 per cent in Axis Bank, 11.27 per cent in ITC, and 8.18 per cent in Larsen & Toubro.

The government will appoint a panel of up to six merchant bankers for sale of SUUTI shareholding in different companies for a period of three years, the official said, adding that in the panel will have domestic and foreign merchant bankers who together will form a team.

According to the revised RFP, "SUUTI reserves its right to use up to three merchant bankers for a transaction. In the normal course SUUTI will utilise the services of the merchant bankers following their rankings."

In case a merchant banker is found to be in conflict at the time of selection for a transaction, then the merchant banker in the next order of ranking will be given the opportunity to execute the transaction, it says. "Any merchant banker who is in conflict in respect of a particular transaction shall be considered for a subsequent transaction on the cessation of the conflict situation, in accordance with the original ranking. This process would be followed for each transaction separately," the RFP notes.

The official quoted earlier, however, said the government is in no hurry to pare down its stake in companies held through SUUTI.

The government has pegged the asset-sale target for the financial year at Rs 56,500 crore, including Rs 20,500 crore from strategic sales.