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| Edited By: Sachin P Mampatta |Source: DNA |Updated: Mar 18, 2018, 05:12 AM IST
The Specified Undertaking of The Unit Trust of India (Suuti) is to be dissolved to create an asset manager which would help the government meet divestment targets.
The final dissolution and the creation of an asset manager is likely to take around a month, according to a person familiar with the matter.
Employees deputed with Suuti are likely to be involved in the creation of the new asset manager as well. The current staff of Suuti largely consists of staff on deputation from UTI.
A news report from CNBC TV-18 on Friday evening said the Cabinet had passed a resolution for winding down of Suuti.
The government’s plan involves dissolving Suuti and transferring its assets to a newly-formed fund manager. This asset management entity would pledge the stakes and use the money borrowed against these assets to purchase the government’s stake in the public sector companies lined up for divestment.
The government has announced a divestment target of `30,000 crore for the financial year ending in March 2013.
Suuti was formed from the restructuring of the erstwhile Unit Trust of India (UTI) after the collapse of its assured-return schemes. Its assets include stakes in Axis Bank (23.58%), ITC (11.54%) and Larsen &Toubro (8.27%), totalling `38,046 crore in value at Friday’s closing prices.
Market mavens suggest that the move could be the outcome of a less-than-enthusiastic response to divestment via the auction route.
“Their attempt at divestment through the institutional placement programme (IPP) did not go off too well. So they are probably exploring alternatives,” said one individual on condition of anonymity.
The Life Insurance Corporation of India bailed out ONGC’s share auction in the beginning of the month after it received tepid response from investors.
