British American Tobacco looks to raise $2.5 billion by trimming 4% stake in ITC, ropes in Wall St banks

Mumbai: British American Tobacco (BAT), the largest shareholder in India's ITC, is working with Wall Street banks Citi and Bank of America to help pare some of that stake and raise up to Rs 21,000 crore ($2.5 billion), according to people with knowledge of the matter..

However, no transaction will happen until the Reserve Bank of India (RBI) approves the move...

The final sale price will be dependent on market value at the time of the transaction but people cited above said BAT, which initiated the exercise some time ago, is open to selling at a discount too, having bought the shares in various tranches since 1910, at a much lower price..

ITC shares have risen 86% in the last three years, making the prospect of selling part of the holding an attractive proposition, especially when BAT is projecting low single-figure organic revenue and profit growth in 2024 because of an expected slow recovery in the US economy..

With overhang from a BAT stake sale, two taxation events over the next 12 months, and slowdown in volume growth, we expect the ITC stock to remain range-bound, going forward, said Vivek Maheshwari & Kunal Shah, analysts at Jefferies, warning that a possible offloading of shares would create a supply overhang...