The government has bought out the 0.23 per cent stake held by the employees' trust in Maruti Udyog Ltd. The buyout of 688,000 shares in the country's largest car maker comes just ahead of its much-awaited initial public offering.

The deal entails a two-part pricing. The first tranche of the shares has been bought out at Rs 115 per share and the payment will have to be made by May 31. The second tranche will be bought out at a price between Rs 115 and the offer price arrived at through the book-building route. This transaction will have to be completed at a reasonable time after the listing of the shares.

"The idea is to provide an exit option for the employees trust' since there is a lock-in period of one year for the pre-IPO capital," sources familiar with the Maruti disinvestment said.

The draft red herring prospectus filed with the Securities and Exchange Board of India says the deal was struck between the two sides on April 16 and the transfer of shares took place on the following day. Under the terms of the trust deed, the stake could only be sold to the government.

The government is offloading a 25 per cent stake in Maruti through the book-building route, which is expected to open next month.

Post-divestment, the government will hold 20.8 per cent in the company, the public 25 per cent and Suzuki Motor Corporation the balance 54.2 per cent.