Saturday, April 15, 2017

Disinvestment spree: Govt readies stake sale in 7 PSUs

THE NDA Government has finalized plans to mop up Rs 35,000 crore by divesting its stake in seven blue chip PSUs through the offer for sale (OFS) route. The Department of Investment and Public Asset Management (DIPAM) is seeking bids from law firms and merchant bankers to facilitate the process.
The PSUs are NHPC Ltd, NTPC Ltd, Power Finance Corporation Ltd (PFC), Rural Electrification Corporation Ltd (REC), Steel Authority of India Ltd (SAIL), NLC India Ltd (NLC), and Indian Oil Corporation Ltd (IOC).
According to the bid documents released by DIPAM, the Centre plans to...
divest 10 per cent stake each in NHPC, NTPC, PFC, and SAIL. It will sell 3 per cent share in IOC, 15 per cent in NLC and 5 per cent in REC. As per closing prices on April 13 , the sale could fetch the Centre upward of Rs 35,000 crore, which is almost half of the budgeted target of Rs 72,500 crore for 2017-18.
DIPAM has invited bids from legal advisers latest by by May 12, and from merchant bankers and selling brokers by May 11. It added that the government was also considering to allot shares to eligible and willing employees of these state-owned firms at a “discount to the issue/discovered price (lowest cut off price) up to a maximum of certain percentage of the OFS size subsequent to completion of the transaction under OFS”. The requests for proposals for stake sale in these seven PSUs have followed DIPAM inviting bids on April 11 to appoint legal advisers and book running lead managers for listing of six PSUs.
Earlier on April 12, the Union Cabinet had given its no for listing of 11 CPSEs, including five PSUs under the railway ministry and four defence companies. The last PSU IPO was that of NBCC in March 2012. Apart from NBCC, the department has also started the process of listing state-owned insurance companies — General Insurance Corporation of India, and New India Assurance — and has invited bids from merchant bankers to appoint book running lead managers.
This disinvestment spree comes at a time when the market is witnessing relatively better conditions, and the 30-stock Sensex recently scaled a lifetime high of 30,000 points. The BSE PSU index also touched a 52-week high of 8,928.86 points on April 12.

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