New Delhi: The government is expected to divest 5 percent equity in Bharat Heavy Electricals Ltd (BHEL) as a part of the exercise to raise Rs 40,000 crore fromdisinvestment during the current financial year.

The stake sale in BHEL, state-owned engineering giant, is likely to yield the government about Rs 4,500 crore at existing market prices.

An official from BHEL said, "The board of directors of the company has recommended the disinvestment of 5 per cent of the paid-up equity of BHEL out of the government of India's shareholding.”

The government currently holds 67.72 per cent equity in BHEL, which will come down to 62.72 per cent following the disinvestment.

The company further said that 10 per cent of the equity to be offloaded under the disinvestment programme would be reserved for employees.

BHEL, meanwhile, has also decided to split its equity shares of Rs 10 face value into five equity shares of Rs 2 each.

During the current fiscal, the government has already raised Rs 1,162 crore through the divestment of a 5 per cent stake in Power Finance Corporation in May. A follow-on public offer by SAIL is likely to hit the market next month and another issue by ONGC in July.