PSU stake sale: Government scouts for merchant bankers

The government is looking to sell stake in bluechip companies like Indian Oil Corporation Steel Authority of India Ltd and NTPC


As per the proposal, the government plans to sell 3% stake in Indian Oil Corporation (IOC), 10% each in steel major SAIL, thermal power major NTPC, NHPC and PFC. Photo: Bloomberg
As per the proposal, the government plans to sell 3% stake in Indian Oil Corporation (IOC), 10% each in steel major SAIL, thermal power major NTPC, NHPC and PFC. Photo: Bloomberg

New Delhi: Kick-starting the process of selling minority stake in 7 public sector undertakings (PSUs) including bluechips like Indian Oil Corporation Ltd (IOC), Steel Authority of India Ltd (SAIL) and National Thermal Power Corporation Ltd (NTPC), which have the potential to collectively raise over Rs34,000 crore, the government has begun scouting for merchant bankers.

The Department of Investment and Public Asset Management (DIPAM) has come out with request for proposal (RFP) for appointing merchant bankers and legal advisers for stake sale in these state-owned companies.

The other companies on the radar are hydro-power firm NHPC, Power Finance Corporation (PFC), REC and NLC India Ltd. DIPAM secretary Neeraj Gupta said no time frame has been fixed for these disinvestments and the RFP is merely a decision to appoint merchant bankers.

“The process is routinely done to explore the possibility of disinvestment. There is no imminent disinvestment in any of these PSUs,” Gupta said.

An official said that these stake sales will take some time to happen as there are already 12 PSUs for which the government has secured approval from the Cabinet to go ahead with disinvestment.

As per the RFP, the government plans to sell 3% stake in Indian Oil Corporation (IOC), 10% each in steel major SAIL, thermal power major NTPC, NHPC and PFC. Besides, a 15% stake in NLC India (formerly Neyveli Lignite Corporation) and 5% in REC is proposed to be put on the block.

At the current market prices, the stake sale could fetch the exchequer about Rs34,000 crore, including Rs13,000 crore from NTPC, Rs6,000 crore from IOC and Rs2,500 crore from steel major SAIL. Besides, a minority stake sale in PFC could fetch Rs4,000 crore, that in NHPC could garner Rs3,000 crore, NLC (Rs2,000 crore) and REC (Rs1,000 crore).

Government holds 58.28% in IOC, 69.74% in NTPC, 75% in SAIL and 74.50% in NHPC. Besides, it holds 90% in NLC India, 67.80% in PFC and 60.64% in Rural Electrification Corporation. In the Budget 2017-18, the government set a target of Rs46,500 crore to be mobilised through minority stake sale and Rs15,000 crore from strategic disinvestment.

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