The government looks to raise about Rs 18,000-19,000 crore as it initiated the process of selling minority stake in eight public sector companies as well as a follow-on offer of the CPSE exchange traded fund (ETF).
This is in addition to the pool of eight companies – Oil and Natural Gas Corp (ONGC), Indian Oil (IOC), NMDC, and BHEL – in which the government may fetch a little over Rs 34,000 crore at current market prices. In all the government has the potential to raise more than Rs 52,000 crore from the pool of 16 companies and the ETF.
Last week, the Department of Disinvestment (DoD) floated proposals to appoint financial and legal advisors on stake sale in National Thermal Power Corp (NTPC), Oil India (OIL), and Bharat Electronics (BEL) among others.
The stake sale in MMTC, ITDC, Hindustan Copper and BEL is being proposed to comply with Securities and Exchange Board of India (Sebi) minimum public shareholding norms. Under current Sebi rules, all listed companies are required to have at least 25% public shareholding till June 2017 or three years from the date of listing for companies listed after June 2014.
Sources in the know said the government intends to begin the disinvestment process in a phased manner instead of rushing at the fag-end of the year. The new strategy is to keep a pool of companies ready for disinvestment and launch the deal when the timing is opportune.
The Centre also intends to sell residual stake in ITC, Axis Bank and L&T held by the SUUTI as well as conduct strategic sale of Hindustan Zinc and Balco.
For fiscal 2016, the Centre has set a record disinvestment target of R69,500 crore of which R41,000 crore is estimated from stake sale and an additional R28,500 crore from strategic disinvestment. Of the total target, the government has raised R1,610 crore after parting with 5% stake in Rural Electrification Corp (REC) in the first week of April 2015.