Government to soon kickstart PSU strategic stake sale to meet divestment target, says official

The government aims to “soon” kickstart the process of strategic sale of equity stakes in public sector undertakings to meet its disinvestment revenue target for the current financial year, Disinvestment Secretary Neeraj Kumar Gupta said on Monday. The government has created a pipeline for strategic stake sale, Gupta said in an interview to ET Now. Indian government has undertaken strategic sale of stake in profitable PSUs to help boost up state revenue and bridge the fiscal deficit, but has repeatedly fallen short of its disinvestment targets in the past. It has a target to earn Rs 56,500 crore by divesting its stake in public sector undertakings in the current financial year 2016-17, and has already garnered Rs 23,500 crore so far this fiscal through share sale and share buyback by the companies.
Manish Singh, Joint Secretary in Department of Investment and Public Asset Management (DIPAM) under Ministry of Finance, said earlier this month that the government is confident of achieving the remaining 60% in the next two-and-a-half months. He added that the government has all the options open including strategic share sale, minority disinvestment and further stake sale.

Gupta said on Monday that the government will continue to disinvest stake in public sector undertakings based on opportunities in the markets. The disinvestment needed to be done prudently and upon considering the market opportunities, he added.

Gupta said the government will make best endeavour to meet its disinvestment target. The Cabinet Committee on Economic Affairs had in October given in-principle approval for strategic stake sale in central public sector enterprises (CPSEs), facilitating the government’s agenda and helping it take measures to meet its revenue targets for the year. The approval was based on the recommendations of the Core Group of Secretaries on Disinvestment.
The immediate candidates lined up for disinvestment include the state-run helicopter services company Pawan Hans Ltd and the CPSE ETF (exchange traded fund).

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The government is learnt to be launching a follow on public offer sometime this week. for its CPSE ETF – the exchange-traded fund mandated to invest in 10 PSUs. It hopes to raise up to Rs 6,000 crore in the issue, which includes a greenshoe option of Rs 1,500 crore. The CPSE ETF, which mirrors the performance of the CPSE index, invests in ONGC, Coal India, Indian Oil Corp, Gail India, Oil India, Power Finance Corp, Bharat Electronics, Rural Electrification Corp, Engineers India and Container Corporation of India.

As for Pawan Hans, the government is learnt to have invited bids to appoint merchant bankers for selling its entire 51% stake. The remaining 49% stake in the company is held by another state-run giant Oil and Natural Gas Corp. Disinvestment of Pawan Hans was proposed as early as in 1997, by the then Disinvestment Commission.