PSU disinvestment nets 71% of total fund raising in Apr-Sept

By: |
New Delhi | October 28, 2015 4:17 PM

State-owned companies account for 71 per cent of the Rs 17,000 crore that has been mopped up through equity issuances during the first half of the current financial year.

DisinvestmentDuring April-September, government has raised Rs 12,600 crore through stake sale in four companies. (Photo: Reuters)

State-owned companies account for 71 per cent of the Rs 17,000 crore that has been mopped up through equity issuances during the first half of the current financial year.

During April-September, government has raised Rs 12,600 crore through stake sale in four companies. This is also the highest amount raised through disinvestment in the first half of a fiscal in past seven years, according to market data.

The government, say market experts, has done “exceedingly well” in PSU stake sale, especially against the backdrop of volatile market conditions. “It has stretched itself to the maximum while offloading PSU equity,” said one expert.

Private sector companies, which have a cumulative market capitalisation of 88 per cent, raised only Rs 4,950 crore through initial public offerings (IPOs).

Government had set a target of raising Rs 69,500 crore through PSU disinvestment in current fiscal. Of this Rs 41,000 crore is to be raised through minority stake sale in PSUs and another Rs 28,500 crore through strategic stake sale.

“The 71 per cent of the total issuance by PSUs in first half is despite PSU stocks accounting for 12 per cent of the total market capitalisation,” said one market player.

Despite a volatile market conditions, the government has garnered Rs 12,600 crore through stake sale in four PSUs – IOC, Dredging Corporation, PEC and REC.

The government has raised Rs 9,396 crore through offer for sale of IOC, Rs 1,673 crore through PFC, Rs 1,610 crore through REC, and another Rs 53 crore through DCIL .

The Rs 12,600 crore in disinvestment kitty is the best first-half performance of the department in 7 years.

In the first half of the last fiscal, 2014-15, the Department of Disinvestment could not divest stake in a single PSU, while in the same period of 2013-14 it had sold stake in six PSUs to garner Rs 1,300 crore.

In first six months of 2012-13 as well, no divestment took place, while one issue could materialise in the same period of 2011-12 to collect Rs 1,500 crore.

In the first-half of 2010-11, DoD garnered Rs 2,400 crore through minority stake sales in PSUs, while the figure for the first half of 2009-10 was Rs 4,200 crore.

So far this fiscal, Indian equity markets have been volatile amid slump in the Chinese market as well as the Greek crisis and fears of impending rate hike by the US Federal Reserve.

The BSE Sensex has dropped by over 6.4 per cent between April and September.

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