A good 26 months after the last initial public offering (IPO) by a public sector company, the Centre is now drawing up another list of three PSUs. The market debuts of these PSUs ? Hindustan Aeronautics, Rashtriya Ispat Nigam and power producer THDC India ? are expected to fetch close to Rs 6,000 crore for the Centre, officials told FE.
The proposed IPOs are a part of the finance ministry’s disinvestment plan for FY15 and may find mention in the upcoming Budget, since the plan has been sent forward to the budget division. While the timeline for the three market debuts has not yet been decided, it is likely that a 10% stake will be divested in each PSU, officials said. The HAL IPO is likely to be worth Rs 3,000 crore, RINL’s issue is expected to garner around Rs 2,500 crore and THDC is expected to mop up about Rs 500 crore.
The decision to take three PSUs to the market comes at a time when the Modi government has made professionalization of state-owned companies one of its main agendas. Apart from the talk of reviving or selling off sick PSUs, the new administration is also actively pursuing the option of strategic stake sale of 50% or more in some of its profitable companies.
During campaigning earlier this year, when asked on getting PSUs rid of bureaucratic decision-making and on possible privatization plans for the PSUs, Modi said that here would be no political pressure or consideration and that ?any decision to privatize should not be political one but a professional one?.
Officials said another factor at play is the bull market. Both the benchmark indices, the Sensex and the Nifty, closed at a record high on Friday. ?The markets have picked up this fiscal and that certainly helps our decision. Also, RINL and HAL IPOs were postponed from earlier fiscal years and hence most of the preparatory work has been done in both of their cases,? a senior finance ministry official said.
FE had reported in February that HAL’s planned 10% IPO worth Rs 3,000 crore was being postponed to FY15 from FY14 due to the company?s inability to complete vital documentation as well as the composition of its board of directors, which did not meet Sebi’s listing requirements. Meanwhile, the IPO of RINL, the corporate entity of Vizag Steel, has been deferred thrice due to weak markets and differences on price band between the governments and the merchant bankers.
The last PSU IPO was that of NBCC, which got listed in April 2012. In fact it has been the only PSU IPO since the beginning of calender year 2011 and now. In 2010, a number of PSU’s including Coal India, United Bank of India, Punjab and Sind Bank and MOIL, went public.