Encouraged by the ‘good’ response from foreign portfolio investors (FPIs) in the latest offers for sales in Concor and NTPC, the disinvestment department is strategising to aggressively market PSUs among investors in countries such as Japan and US, where Prime Minister Narendra Modi has created a positive buzz about opportunities in India.
An action plan is being readied to increase engagement with select top investors of these countries in one-to-one as well as group interactions to showcase the opportunities in various sectors such as infrastructure, metals and oil & gas, sources told FE.
To improve ease of doing business, the department may designate a nodal officer, who could be contacted by investors directly for company specific queries. Currently, they have to route such queries through merchant bankers.
After a lacklustre response from FPIs in most part of the current fiscal, their participation increased in the latest government stake sales in Concor and NTPC. The FPIs bid for 32% of the OFS size of Rs 1,165 crore in Concor in March and 18.5% in NTPC OFS for Rs 5,000 crore (February), up from 13.5% in Engineers India Limited OFS of Rs 643 crore (January).
The FPIs had stayed away from the Centre’s OFS worth Rs 9,369 crore in Indian Oil Corporation in August 2015 due to volatility in the stock market.
“We have to revisit the approach of single company-centric roadshows and switch to sector specific discussions with investors,” an official said.
Past experience shows company-specific roadshows have resulted in hammering of these stocks while sector-specific roadshows would diminish that scope.
Officials expect foreign participation in the government’s disinvestment programme would significantly increase after the Budget announcement on February 29, increasing the FPI limit in non-bank PSUs to 49% from 24%.
In a whirlwind tour of major economies of the world since coming to power in May 2014, Modi has vigorously marketed opportunities in India to large global investors including pension and insurance funds and promised greater access, cutting red-tape and simple tax regime.
Despite India being a “sweet spot” in an otherwise volatile world, officials admit that the bureaucracy has not been able to translate the goodwill of investors into actual investments. So, it is now gearing up to make that a reality by constantly engaging with them.
With three consecutive issues in the past three months, the officials said the effort now would be to bring small stake sales in PSUs on a regular interval to maximise the opportunities subject to market conditions.
The government has revised the disinvestment revenue target to Rs 25,300 crore for current fiscal as against Rs 69,500 crore set in Budget. Out of Rs 56,500 crore target set for next fiscal, Rs 36,000 crore is estimated to come from minority stake sales in PSUs and the remaining Rs 20,500 crore from strategic stake sales.
