Governance Now Masterminds

PSU stake sale: SEBI to be urged to extend deadline

Most of these PSU are facing difficulty in further diluting stake in such a short period as it will make valuations less attractive if too many PSUs hit the market in a short span of time.

GN Bureau | March 2, 2017


#SEBI   #stake sale   #PSU   #finance ministry  
 
The finance ministry may approach the Securities and Exchange Board of India (Sebi) to relax its August 21 deadline for PSUs to meet minimum 25 percent public shareholding requirement norm.
 
More than 15 PSUs including STC, MMTC, NLC, SJVN, ITDC, Hindustan Copper, Coal India, have less than 25 percent floating shares, The Statesman reported.
 
Sources said most of these PSU are facing difficulty in further diluting stake in such a short period as it will make valuations less attractive if too many PSUs hit the market in a short span of time. It could end up overcrowding the market, officials were quoted as saying.
 
The SEBI stipulated this new norm in 2014 and gave a three-year time for compliance. Earlier, the PSUs were required to have only 10 percent public shareholding.
 
Sources said another reason is that some PSUs such as HMT, ITI and Scooters India are sick and it would not be easy for the government to sell minority stake in these companies. 
 

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