Leaving behind the slippage in SAIL follow-on public offer (FPO), the government is readying to put the disinvestment process in top gear from July and line up ONGC for a big-ticket stake sale. More state-run companies are also being readied for disinvestments.
“ONGC stake sale should happen in July. Bankers for National Building Construction Corporation (NBCC) divestment would be selected today and a Cabinet note for Bhel has already been circulated,” said a senior finance ministry official. No decision had been taken as yet on the fresh timing of SAIL FPO as yet, but it was also likely to be included in due course, he added.
When contacted, Expenditure Secretary Sumit Bose, who is also holding the charge of disinvestment secretary, told Business Standard, “We are moving ahead and adding new companies to the pipeline and are confident of meeting the target set for this year”.
Bose, however, declined to comment on the disinvestment schedule of individual companies. The government has already held a few meetings with the merchant bankers on the issue of disinvestment in oil sector major ONGC. The government plans to raise Rs 13,000 crore by selling a 5 per cent stake in the state-run firm.
After the stake sale, government’s holding in ONGC will come down to 69.14 per cent from 74.14 per cent.
Besides, the government has announced to sell a 5 per cent stake in engineering and electrical giant Bhel in the current financial year to raise around Rs 4,500 crore.
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The board of Bhel has recommended disinvestment of 5 per cent of the paid-up equity capital out of Centre’s shareholding. Out of the total issue, 10 per cent will be reserved for allocation to employees, subject to approval of the government. In the case of NBCC, the government has decided to split existing shares of Rs 1,000 face value into ten shares of Rs 100 each with a view to attract more retail investors to the proposed 10 per cent initial public offering.
The disinvestment of NBCC will be through the book building route. The paid-up capital of the company is Rs 90 crore and the government holds a 100 per cent stake.
The government has set a target of raising Rs 40,000 crore in 2011-12 from disinvestment in some of the major blue chip companies which include ONGC, SAIL, Hindustan Copper, Bhel among others.
The government has already raised Rs 1,162 crore through the divestment of 5 per cent stake in Power Finance Corporation in May.
However, the uncertain market environment has cast a shadow over the proposed SAIL follow-on public (FPO) offer from which the government wants to garner a minimum of Rs 8,000 crore. According to the plan, SAIL will issue new shares equal to 10 per cent of its existing share capital in the FPO.
In each tranche, 5 per cent of the government holding will be divested and fresh shares equivalent to 5 per cent of SAIL’s share capital will be issued. The FPO was to hit the market on June 14 but has been deferred now.