March 20 (Bloomberg) -- India started the sale of a nine percent stake in Axis Bank Ltd., the country’s third-largest private sector lender by assets, people with knowledge of the matter said.
The government will sell about 42.25 million shares at a discount of as much as 5 percent to today’s closing price of 1,357.35 rupees, the people said, asking not to be identified before an official announcement. The offering could raise about 54.5 billion rupees ($888 million) if priced at the maximum discount.
The stake sale will bolster Finance Minister Palaniappan Chidambaram effort to narrow the South Asian nation’s budget deficit to 4.1 percent of gross domestic product by the fiscal year ending March 2015. The government plans to raise 190 billion rupees selling stakes in companies in the financial year ending this month, down from an initial target of 540 billion rupees, Chidambaram said Feb. 17.
Citigroup Inc., JM Financial Ltd. and JPMorgan Chase & Co. are among banks arranging the share sale, the people said. The banks working on the deal will get a fee of one rupee, while the expenses will be paid by the government, people familiar with the matter said Jan. 21.
The government holds a 20.72 percent stake in the bank through the Specified Undertaking of the Unit Trust of India, exchange filings show. K.N. Prithviraj, the administrator of SUUTI, didn’t answer two calls to his mobile phone seeking comments on the share sale.
The government is seeking to raise another 30 billion rupees through an exchange-traded fund of state-run company shares, Alok Tandon, joint secretary at India’s disinvestment department, told reporters March 14. The fund is managed by Goldman Sachs Asset Management.
Shares of Axis Bank have risen 4.5 percent since the start of the year, outpacing the 2.7 percent gain in the country’s benchmark S&P BSE Sensex index.
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