13-Feb-2024
2 mins read
ITC shares price showed minor gains in the early morning of Tuesday, February 13, 2024. Shares of ITC are in focus, as British American Tobacco (BAT), largest shareholder of ITC, is going to sell its 4% stake to raise Rs 21000 crore.
BAT is in talks with Wall Street Banks – Bank of America and Citi to pare some of its stake in ITC.
Previously, BAT owned 29.03% stake in ITC at the end of December quarter. Its total stake in cigarette market ITC worth Rs 1.47 lakh crore and ITC market capitalization stands at Rs 5.08 lakh crore.
If BAT successfully sells its 4% stake, then also it will continue to hold 25.3%. The fresh move by BAT will help the company to raise capital and resume a share buyback programme.
What BAT Commented About ITC?
BAT said “We recognise that we have a significant shareholding which offers us the opportunity to release and reallocate some capital.”
Further the company added “Our shareholding in ITC has existed in one way or another since the early 1900s and is subject to numerous share capital changes and regulatory restrictions. We have been actively working for some time on completing the regulatory process required to give us the flexibility to monetise some of our shareholding and will update you at the earliest opportunity.”
Regulatory Hurdles in Offloading Shares
Currently, BAT is facing regulatory hurdles in offloading the ITC shares, as the RBI does not allow the FDI investment in Tobacco companies. Therefore, it limits the pool of potential buyers based on the current regulatory framework.
In the last week, February 8, BAT said it is working toward completing the regulatory process to pare its stake in the FMCG giant. BAT is looking for all opportunities to enhance the balance sheet flexibility and this stake sale will help BAT to get flexibility in their Balance sheet.