The government has asked investment bankers that manage the stake sales of public sector companies for a share of the interest income earned from subscription funds. These funds are at the bankers? disposal typically for three weeks?the time between subscription and actual allotment to an investor. The interest income is a bonus over and above the fee charged by investment bankers.
The government hopes to earn up to Rs 120 crore from such commission from the forthcoming NMDC issue alone, a senior disinvestment department official told FE. The NMDC stake sale is expected to fetch Rs 14,000 crore.
The department has settled on a daily commission of Rs 800 on Rs 1 crore put in by qualified institutional buyers, who typically pick up 60% of the total stake on offer. It had called for bids from banks, which offered to pay daily between Rs 40 and Rs 1,000 on Rs 1 crore of the float until the time of listing.
The official, however, said the actual commission amounts could differ depending upon the interest income realised on the subscription money blocked with the bankers. Usually, banks earn at least the rates prevalent in the call money market on the subscription money. The weighted average call money rate stood at 3.26% on Tuesday, according to Reserve Bank of India data.
Qualified institutional buyers are required to put in 10% margin money while subscribing to an IPO, whereas retail investors have to pay 100% upfront. The government can get commission only on the qualified institutional buyers? portion of the subscription. Bankers do not enjoy any income on the money put in by retail investors.
Retail investors now invest through a process called application supported by blocked amount (or, Asba), wherein the money remains in an investor?s account until they are allotted shares. Any interest income that is accrued between the time of subscription and actual listing remains in the account. From January 1, Sebi extended the Asba facility to high net-worth individuals and corporate investors.
The official said the actual amount realised by the government this fiscal from disinvestment could be close to Rs 24,000 crore, including the amount raised from Oil India and NHPC, as well as the upcoming four public offers.
?The government has accounted for Rs 1,120 crore from disinvestment proceeds in Budget 2009-10, but raised it to about Rs 12,000 crore in the second supplementary. The actual amount realised this year could be actually double that this fiscal,? the official said.