Fol­low-on Of­fers for Divest­ment Mooted

The Economic Times - - Economy - DHEERAJ TIWARI

Fi­nance min­istry of­fi­cials have pro­posed divest­ment through fol­low-on of­fers and open of­fer for sale to in­crease the mar­ket float of state-run com­pa­nies. Some of the big com­pa­nies where govern­ment has room to di­lute more stake in­clude Coal In­dia, Sail, MMTC, NMDC, NHPC, Neyveli Lig­nite and Nalco. Ac­cord­ing to a se­nior fi­nance min­istry of­fi­cial, the govern­ment can ac­cept the rec­om­men­da­tions made by mar­ket reg­u­la­tor Stock Ex­change Board of In­dia (Sebi) to bring pub­lic float in state-run firms at par with pri­vate firms.

At present, pri­vate com­pa­nies have to main­tain a min­i­mum 25% pub­lic float while the limit for PSUs is 10%.

“These points have been in­cluded in the pre­sen­ta­tion made to the fi­nance min­is­ter,” said the above quoted fi­nance min­istry of­fi­cial, adding that govern­ment will main­tain ma­jor­ity stake of 51% in all its en­ter­prises.

The NDA govern­ment, which pushed ag­gres­sive pri­vati­sa­tion in its last stint, has not taken a clear stand on the is­sue. Go­ing by the Gu­jarat ex­peri- ence, the Modi govern­ment may foucs on strength­en­ing state-run com­pa­nies. As per a re­search note by Stan­dard Char­tered, a buoy­ant eq­uity mar­ket in­creases the chances of higher dis­in­vest­ment pro­ceeds in FY15. “The BSE PSU in­dex has in­creased by 56% since the end of Fe­bru­ary 2014,” it noted in its re­port. “This will also broad base the mar­ket. As of now, the mar­ket

Go­ing by the Gu­jarat ex­pe­ri­ence, the Modi govern­ment may foucs on strength­en­ing state-run com­pa­nies

is not deep enough and most ac­tion is limited to a hand­pick of scrips,” the above quoted of­fi­cial added. In 2012, Sebi had an­nounced manda­tory 25% pub­lic hold­ing for both pub­lic as well as pri­vate com­pa­nies but later it al­tered the min­i­mum pub­lic share­hold­ing norms for listed pub­lic sec­tor en­ti­ties and they were to main­tain at least 10% pub­lic hold­ing by Au­gust 2013. “Un­like in the pre­vi­ous govern­ment, the ad­min­is­tra­tive min­istries will not be sab­o­tag­ing the dis­in­vest­ment agenda and it can be pur­sued in earnest,” said the above quoted of­fi­cial.

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