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The government might sell a 10 per cent stake in public sector behemoth Coal India this financial year. At the current price, this would fetch Rs 23,450 crore, making it the single biggest stake sale by a government.
The finance ministry’s disinvestment department has issued a Request for Proposal (RFP) to engage merchant bankers for divesting the stake, through the Offer for Sale (OFS) route. The RFP states the government is also considering allotting shares to employees of Coal India at a discount of up to five per cent to the issue price, and up to a maximum of five per cent of the OFS size, after the latter's completion.
“The employees will be eligible to apply for shares up to Rs 2 lakh (each) only. The method and procedure of allotment to the employees has been worked out in consultation with the merchant bankers and legal advisors to the past issues and is under reference to Sebi (the capital markets regulator),” the RFP stated.
In 2014-15, too, the government sold a 10 per cent stake in the company, for Rs 22,600 crore, the single largest stake sale ever. Business Standard first reported in April that the government would consider selling stake in Coal India this year as well. The thinking then was to sell a five per cent stake.
For 2015-16, the budgeted disinvestment target is Rs 69,500 crore, of which Rs 41,000 crore is expected from stake sales in state-owned companies and Rs 28,500 crore from sale of loss-making public sector units or other unviable assets like warehouses, factories, hotels and the like.
The government already has cabinet approval for stake sales worth Rs 50,000 crore in 20 companies, though all of these might not be sold this year. It is in the process of selecting merchant bankers for many of these, including MMTC, NMDC, Container Corporation, Indian Oil, Oil India, National Aluminium, Bharat Electronics, India Tourism, Hindustan Copper and NTPC.
Senior government sources said a cabinet note has been sent on the company’s disinvestment and is expected to be taken up soon. Once that is given, selection of merchant bankers will take place. So far this financial year, the government has sold five per cent stake each in Rural Electrification Corporation and Power Finance Corporation. Each garnered about Rs 1,600 crore.
The finance ministry’s disinvestment department has issued a Request for Proposal (RFP) to engage merchant bankers for divesting the stake, through the Offer for Sale (OFS) route. The RFP states the government is also considering allotting shares to employees of Coal India at a discount of up to five per cent to the issue price, and up to a maximum of five per cent of the OFS size, after the latter's completion.
“The employees will be eligible to apply for shares up to Rs 2 lakh (each) only. The method and procedure of allotment to the employees has been worked out in consultation with the merchant bankers and legal advisors to the past issues and is under reference to Sebi (the capital markets regulator),” the RFP stated.
In 2014-15, too, the government sold a 10 per cent stake in the company, for Rs 22,600 crore, the single largest stake sale ever. Business Standard first reported in April that the government would consider selling stake in Coal India this year as well. The thinking then was to sell a five per cent stake.
For 2015-16, the budgeted disinvestment target is Rs 69,500 crore, of which Rs 41,000 crore is expected from stake sales in state-owned companies and Rs 28,500 crore from sale of loss-making public sector units or other unviable assets like warehouses, factories, hotels and the like.
The government already has cabinet approval for stake sales worth Rs 50,000 crore in 20 companies, though all of these might not be sold this year. It is in the process of selecting merchant bankers for many of these, including MMTC, NMDC, Container Corporation, Indian Oil, Oil India, National Aluminium, Bharat Electronics, India Tourism, Hindustan Copper and NTPC.
Senior government sources said a cabinet note has been sent on the company’s disinvestment and is expected to be taken up soon. Once that is given, selection of merchant bankers will take place. So far this financial year, the government has sold five per cent stake each in Rural Electrification Corporation and Power Finance Corporation. Each garnered about Rs 1,600 crore.
