British American Tobacco (BAT) is awaiting the approval of the Reserve Bank of India (RBI) before being able to sell its participation to 15.29% in ITC hotels. Bat is the largest ITC shareholder.This is required since the ITC dates back to the early 1900s, the CEO of Bat Tadeu Marroco told analysts on a gain call last week.
Unlocking of actions
“Sometimes things takes more time to unlock those actions, get the right approvals in the right forums,” he said. “In this case, it is the central bank in India, in order to be able to make transactions.”
Once you arrive, Bat will embark in the sale of participation as it will help the company return to the corridor of the net debt/EBITDA rectified 2.5x by the end of 2026. “We intend to use the proceeds of the hotel by deleverage further the company,” he said.
The hotel business was lost by ITC in January. Based on the plan, ITC shareholders hold 60% of the unit with the rest of ITC. As a result, Bat has 15.29% in ITC hotel As a direct foreign investment, making it the largest public shareholder after the detention of the ITC promoter of 39.87%, according to the share model at the end of June.
Starting from June, ITC Hotels had a portfolio of over 200 hotels-143 operations and 58 on site.
Analysts who monitor the company have said that RBI’s approval is required as this agreement involves a foreign company that sells its shares in an Indian company and taking the money from India. They added that it could also have something to do with ITC which is a tobacco company and the ides are not allowed in the segment. Marroco said Bat wants to give up the stake as “strategically” does not want to be in the hotel sector.
Capital flexibilityBat has recently reduced its participation to ITC through two block agreements after receiving the approval of the RBI in February last year (3.5%) and May this year (2.5%), lowering their participation in the FMCG cigarette greater than 22.93%from 29%.
Marroco has declared in the last communication of the profits that the continuous conversion of cash of Bat and the recent partial monetization of his participation ITC has improved his flexibility of capital. The company received 1.1 billion from the sale of the parts of May, which has increased the reconciliation of shares for 2025 from 0.9 billion to 1.1 billion.
Bat said that in the context of Demerger’s accounting of ITC hotels, ITC recognized the excess of fair value with respect to the transport value of the hotel business as a regulation article. The share of Bat of this rectified gain amounted to 333 million (net of taxes), said in the release of profits.
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