The government is planning to hit the market with eight to nine more public sector units? (PSU) public offers this fiscal, with a view to meeting the target of garnering R40,000 crore from disinvestment.
Since four to five months would go without any PSU offers due to summer and winter breaks in the US and EU, this would mean that the remaining five months would see about two issues each.
Power Finance Corporation (PFC)?s follow on public offer the only PSU disinvestment that the government could carry out this fiscal. This FPO in May fetched the government R1,100 crore.
Thanks to the ongoing summer break and the December-January winter lull in Europe and US which could foil foreign investors? participation in the programme, activity on the disinvestment front would be seen at its peak in the months of September, October, January, February and March, a senior official said. A final call would depend on market sentiments.
Among individual offers, the big ticket Oil and Natural Gas Corporation (ONGC) follow-on offer is tentatively slated for September. Bhel?s FPO could immediately follow the ONGC offer.
Steel major SAIL, MMTC, National Building Construction Corporation (NBCC), Rashtriya Ispat Nigam (RINL), IndianOil and Hindustan Copper are among others in the line-up.
According to the source, the disinvestment department would give precedence to Railways and the defence sector when it comes to selecting firms for disinvestment.
The official added, ?We are looking at Hindustan Aeronautics Limited (HAL) for minimum public float of 10% as per the policy. The defence major has already announced a R20,000 crore modernisation plan to be carried out over the next ten years.
Some of the other profit making companies from the defence sector which could be considered are Bharat Electronics and Bharat Earth Movers (BEML), both of which are listed companies.?
As for the Railways, Rites, Ircon International Limted (IRCON) and Container Corporation of India (Concor) are being considered. The government holds over 99% stake in Ircon and 63.09% in Concor.
All the issues will now have to be accommodated at close intervals in the remaining months of the financial year if government remains committed to achieve targeted disinvestment earnings of R40,000 crore during 2011-12.
A few issues have already got delayed by few months due to choppy market conditions. However, the official sounded optimistic. ?I’m confident that the market has enough appetite for these public issues,? he said.
The big-ticket public issue of ONGC is expected to mop up R11,500 crore. The FPO through which the government plans to sell 5% (427.77 million shares) was originally planned for 2010-11 fiscal but was first deferred to April 5, as the company did not have adequate number of independent directors on its board to meet the market regulator, Securities and Exchange Board of India or Sebi?s listing norm.
The issue was later slated for July 5 and now has been further pushed as investors need clarity on the mechanism for oil subsidy sharing before the issue can hit the market.
From the public issue of SAIL, the government is hoping to garner R6,000 crore. The divestment of BHEL is expected to raise about R4,500 crore and the government?s stake in the company would come down to 62.72% from the 67.72%at present.