LIC sees opportunity in divestment of ONGC and SAIL

Written by Jash Kriplani | Mumbai | Updated: Oct 31 2014, 07:05am hrs
After mark-to-market gains of over 30% from the ONGC stake sale in FY12, LIC is looking forward to the government's divestment programme to raise its stake further in the oil & gas company if the shares are offered at an attractive price, said a source.

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Apart from ONGC, the insurer sees SAIL as an attractive opportunity. The government plans to sell 5% stake in ONGC and 5% stake in SAIL to meet its Rs 58,425-crore disinvestment target. At current market prices, the government's stake sale in ONGC and SAIL could fetch the exchequer Rs 16,993 crore and Rs 3,440 crore, respectively.

Among other stake sales lined up by the government, Coal India could fetch Rs 22,754 crore to the exchequer at the current market price. Disinvestments in REC and PFC together could raise Rs 3,279 crore. The 11.4% stake sale in National Hydroelectric Power Corporation (NHPC) could fetch Rs 2,515 crore.

The government has already initiated the valuation process for HZL (29.5%) and Balco (49.%) stake sale. Estimates suggest the exchequer could get Rs 22,000-25,000 crore from both the companies. In both the companies, majority of the stake is owned by London-listed Vedanta Resources.

According to reports, the government has raised its FY15 disinvestment target by 41% over last year to Rs 80,000 crore.

The previous government had missed the disinvestment target for five consecutive financial years. In FY11 and FY12, the government had raised Rs 22,144 crore and Rs 13,894 crore , respectively, through disinvestment, against the budgeted target of Rs 40,000 crore each year. In FY13, it had raised Rs 23,956 crore, against the target of Rs 30,000 crore. In FY14, the government raised Rs 16,027 crore against the target of Rs 40,000 crore. The target in revised estimates was scaled down to Rs 16,027 crore.

Finance minister Arun Jaitley had recently said the government's disinvestment programme was on track and a schedule for the stake sale would be announced soon.