State-run Life Insurance Corporation of India (LIC) will acquire 5 per cent stake in Bharat Heavy Electricals Ltd (BHEL) through a block deal, which is expected to fetch the national exchequer nearly Rs 20.46 billion.
The announcement was made on Friday by Disinvestment Secretary Ravi Mathur, who said that the government would divest 5 per cent stake in BHEL to LIC through a block deal this fiscal.
BHEL’s parent department, the Department of Heavy Industries, has long been opposing the proposal of disinvestment in BHEL, saying market conditions are not suitable for selling a stake in the company.
Heavy Industries Minister Praful Patel earlier said, “As far as the Bhel stake sale is concerned, we have ruled out going to the market for 5 per cent divestment because we feel that market conditions are not suitable for the moment for such a valuable company to be sold in the open market.”
In August 2011, the Congress-led UPA government’s Cabinet had approved the proposal for sale of a 5 per cent stake in the Navratna firm through a follow-on public offer (FPO).
The government currently owns 67.7 per cent stake in BHEL, which reported a net profit of Rs 6.95 billion for the October-December quarter of current fiscal, down from Rs 11.81 billion in the corresponding period of the previous fiscal.
BHEL shares gained 3.18 per cent to close at Rs 167.20 apiece on the Bombay Stock Exchange on Friday, valuing the company at Rs 409.23 billion.