Government eyes stake sale in more PSUs -Governance Now

Government eyes stake sale in more PSUs

It may launch a second exchange traded fund and further sell stake in SUUTI

GN Bureau | September 30, 2016

#PSUs #NMDC #NALCO #BHEL #SUUTI #UTI

The government is looking to sell some of its stake in NMDC, NALCO, BHEL through the offer for sale (OFS) route. According to a news report in moneycontrol.com, the centre may divest through an OFS in companies that bought back government shares, in accordance with its plan to dilute share in public sector undertakings (PSUs).

The government aims to raise Rs 5,000-7,000 crore in the period of October 2016-March 2017 by divesting in mid-sized companies. It may launch a second exchange traded fund (ETF) and further sell stake in Specified Undertaking of UTI (SUUTI) during October-March.

The government kicked off its divestment drive on a high note when it announced to sell its minority shareholdings in the SUUTI fund in July. But the plan hit a roadblock when it received a tepid response from investment bankers and had to pull back its request for proposal (RFP). It then reissued the RFP, and also increased the number of merchant bankers to six from three to underwrite its stake sale.

SUUTI was formed in 2003 as an extension of the United Trust of India (UTI). It comprises 51 companies - 8 unlisted and the rest listed companies. Through SUUTI, the government holds minority stake in these companies and is planning to divest its shareholding.

The government is mulling to divest through an offer for sale (OFS), a block deal, a bulk deal or just by a regular sale on stock exchanges. Three blue-chip stocks – Axis Bank, ITC and L&T – which contribute to approximately 95 percent of SUUTI’s holdings in value terms, can bring in around Rs 63,000 crore if divested completely.

To reach its divestment target of Rs 56,500 crore for this fiscal, the government has been on the front foot to raise revenue. The government has already put 7 percent of its stake in Hindustan Copper for sale through an OFS, that began on Friday and will help to raise Rs 401 crore. It also plans to sell 10 percent stake in NMDC, for which an overseas roadshow was started on September 5. At current prices, a 10 percent sale in NMDC could earn the government around Rs 4,000 crore.

Comments

Other News

Enhanced MCA21 V3 Portal Paves the Way for Improved Corporate Governance

By Sudhir Chaturvedi, Executive Board Member & President- Markets, LTIMindtree Corporate governance has always been a critical issue for businesses in India. As part of its ongoing digitalization drive, the Ministry of Corporate Affairs (MCA) recently launched the latest

“I pray to God that such an incident never happens in future”

Life is slowly limping back to normalcy in Bahanaga, a block headquarters town in Odisha’s Balasore district that witnessed one of the deadliest rail disasters of the century. Train operations have resumed as the Central Bureau of Investigation (CBI) has begun the probe into the accident that claimed

Gandhi’s Triumph over the Fear of Death

The Essential U. R. Ananthamurthy Edited by N. Manu Chakravarthy and Chandan Gowda Aleph Books, Rs 899, 312 pages

Bird walks for youngsters to be held across India

Early Bird and the Rainmatter Foundation have announced five bird walks, led by naturalists, across India on June 10. The walks, to be held in Agartala, Dehradun, Mysore, Panjim, and Tirupati early in the morning, are part of the Rainmatter Foundation’s Walking Lightly campaign, being observed throug

India celebrates Environment Day with thrust on Mission LiFE

The Ministry of Environment, Forest and Climate Change, Government of India organized the World Environment Day on Monday with a thrust on Mission LiFE. The concept of LiFE, i.e., Lifestyle for Environment was introduced by prime minister Narendra Modi at the World Leaders` Summit in Glasgow at COP26, when

Green banking: an emerging way forward

Green Banking is an initiative taken by the banks to promote environment-friendly practices and reduce carbon footprint of their activities. Green financing (a part of ‘Green Banking’) is a broad term that can refer to a financial investment flowing into sustainable development projects and ini