British American Tobacco Plc (BAT), the UK-based cigarette manufacturer and the largest shareholder in ITC, is preparing to sell its entire stake in ITC Hotels. The company is currently awaiting approval from the Reserve Bank of India (RBI) to proceed with the divestment.
BAT holds a 15.29% stake in ITC Hotels, which was demerged from ITC Ltd in January 2025 and listed on Indian stock exchanges later that month. The stake sale marks BAT’s continued exit strategy from the hospitality sector.
Strategic Non-Alignment with Hotels
During its latest earnings call, BAT Chief Executive Tadeu Marroco reaffirmed that the company has no intention of being a long-term shareholder in any hotel business in India or globally. He noted that the shareholding in ITC Hotels dates back to the early 1900s, and while the decision to exit is clear, the process is subject to procedural approvals.
“Unlocking these shares requires clearance from relevant forums, including the RBI, before any transaction can be completed,” Marroco said.
Why RBI Approval Is Needed
As BAT’s stake is classified as foreign direct investment (FDI), any sale would involve the repatriation of funds abroad, making central bank approval a mandatory step.
History of Stake Reduction
BAT has been gradually cutting its stake in ITC over the past two years. The company received RBI clearance for two block deals—selling 3.5% in February 2024 and another 2.5% in May 2025—reducing its holding in ITC from 29% to 22.93%.
Under ITC’s demerger structure, shareholders of the parent company hold 60% of ITC Hotels, while ITC retains the remaining 40%. BAT’s current 15.29% position makes it the largest public shareholder after ITC’s promoter stake of 39.87%.
Future Use of Proceeds
BAT has previously indicated that funds from the eventual sale will be used to bring its leverage ratio into the targeted 2–2.5 range by 2026, aiming to strengthen its balance sheet and deliver greater shareholder value.
The timing of the sale remains contingent on regulatory approval and market conditions.
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