Public sector enterprises (PSEs) are going to be the focus of most new initiatives of the Bombay Stock Exchange (BSE) as the Asia?s oldest bourse has decided to design products considering the needs of investors in listed and soon-to-be-listed public sector firms.
Two factors have contributed to PSEs getting the top billing in product design by BSE: one, the huge market capitalisation of listed PSEs; and two, the prospect of more of them hitting the market as a result of the government decision to offload its stakes in these firms.
?Public sector firms account for more than 30% of the total market capitalisation of firms listed on the BSE as on December 31, 2009 and form a very important client base for us. Therefore, we will focus on PSE investors while designing our products,? BSE managing director & CEO Madhu Kannan told FE .
Of the total 214 central PSEs, 44 are listed on the stock exchange and accounted for 25% of the total market capitalisation of 4,874 companies listed at the bourse at the end of December 2009. In addition to CPSEs, 26 public sector banks and six state-level public enterprises accounted for an additional 5% of the total MCap at BSE. The total MCap of these firms was Rs 18,37,140 crore on December 31, 2009.
Last year, the government announced plans to sell its stakes in all listed PSEs where public shareholding is less than 10%. It also wants to list those profitable PSEs having a positive net worth. The decision would lead to initial and follow-on public offerings of at least 60 central PSEs over a period of time.
BSE estimates the government decision to ensure at least 10% shareholding in the already- listed PSEs could lead to disinvestment of more than Rs 42,779 crore at current market prices. The government has already collected Rs 4,260 crore by selling stakes in NHPC Ltd and Oil India Ltd in 2009-10 and is likely to collect up to Rs 15,000 crore by the end of March 2010.
Public offers of Bharat Sanchar Nigam Ltd (BSNL), Coal India Ltd and Hindustan Petroleum Corporation are also in the pipeline. The initial public offer of BSNL is likely to raise Rs 40,000 crore, while Coal India could generate Rs 3,000 crore and Hindustan Petroleum Rs 5,000 crore through their public issues of shares, as per data available at bsepsu.com, the website launched by BSE on January 20.
The website, a single-point source of information on the PSEs, was created to bridge the huge ?go to market? knowledge gap about PSEs. It also contains data on the ongoing initial or follow-on public offerings, adding to a comprehensive database of past disinvestments.
