The government is moving ahead with its plans to sell part of its holding in two recently listed insurance entities – General Insurance Corporation of India (GIC) and the New India Assurance Company Limited (NIACL) – as the finance ministry now has invited proposals from merchant bankers to advise on the share sale in the two firms.
“The government is considering for disinvestment a part of its paid-up equity in GIC and NIACL out of its shareholding through “offer of sale (OFS) by promoters through Stock Exchanges,” the Department of Investment and Public Asset Management (DIPAM) said in newspaper advertisements published on Thursday.
The interested merchant bankers can apply for assisting the government in the share sale process by December this year.
Earlier in January 2017, the Cabinet Committee on Economic Affairs (CCEA) had cleared the proposal of the IPO of five state-run non-insurance companies and bringing down the government’s holding in them from 100% to 75%. While GIC made its stock exchange debut in October last year, New India Assurance Co got listed on the stock exchanges in November last year.
Also read: ONGC may defer dividend payout this year; says, will buy back govt shares or pay dividend, not both
In the last fiscal, the Narendra Modi-led government garnered Rs 1 lakh crore, helped by completion of the acquisition of Hindustan Petroleum Corp Ltd by state-run oil major ONGC for around Rs 37,000 crore.
For the current financial year 2018-19, the government has set a disinvestment target of Rs 80,000 crore. With its unsuccessful bid to divest stakes in national carrier Air India, the government may find it difficult to achieve the target for the current fiscal. So far, the government has mopped up about Rs 15,247 crore through PSU stake sale.
The government is also said to have identified state-run oil firms, including ONGC, to buy back part of the government’s shares, thus transferring the surplus amount to the government and helping the latter to achieve the disinvestment target for the current fiscal.
Meanwhile, ONGC has informed the Ministry of Finance that it may defer the interim dividend plan for the current financial year 2018-19, as it can either pay interim dividend or buy back government shares in the company, but not the both as it needs some time to build a corpus for the payout, The Indian Express reported.