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After a two-month lull, the government's disinvestment drive for 2015-16 seemed to be back in focus. The Centre on Friday issued requests for proposal (RFP) for merchant bankers and legal advisors for stake sale in 10 state-owned companies - Oil India, Container Corp, NMDC, MMTC, ITDC, NTPC, Engineers India, BEL, Nalco, and Hindustan Copper.
The selection of legal advisors and merchant bankers will be followed by investor roadshows and the stake sales on the exchanges through the offer-for-sale (OFS) route. The government also issued a request for proposal (RFP) inviting legal advisors for the Goldman Sachs-managed Central Public Sector Enterprises Exchange Traded Fund (CPSE ETF). The last date for applications for all the proposals is July 24.
The department of disinvestment (DoD) issued two RFPs for selecting merchant bankers. Each merchant banker will handle five stake sales at a go.
The Centre will pare 10 per cent stake each in Oil India and NMDC, 15 per cent stake in MMTC, 12.03 per cent stake in ITDC, and five per cent stake in Concor. The second RFP for sale is of 15 per cent stake in Hindustan Copper, 10 per cent stake in Nalco and Engineers India, and five per cent stake in NTPC and BEL.
At current share prices, the planned stake sale in these 10 companies would combine for upto about Rs 20,000 crore worth of disinvestment proceeds, nearly half of the budgeted target of Rs 41,000 crore from minority stake sale in public sector undertakings (PSUs).
This time around, the government will bundle multiple companies' request-for-proposals and roadshows.
Traditionally, after getting Cabinet approvals, the disinvestment department issues separate requests for proposal (to engage merchant bankers) for each company in which stake sale is being planned. Similarly, investor roadshows are usually done separately for each company. But, as is the case today, a single merchant banker or a group of bankers will handle four to five companies' stake sales together.
With the first quarter of the financial year almost over, government officials have said such a move would save time and not give merchant bankers the luxury to pick and choose, working only on the most attractive names.
The RFPs for legal advisors, however, were issued separately. An RFP was also issued to select legal advisors for the CPSE exchange traded fund (ETF). Launched on March 28 and listed on April 4, 2014, the CPSE ETF had raised Rs 3,000 crore for the governmentin FY13. It comprises 10 PSU scrips- Coal India, ONGC, GAIL, Rural Electrification Corp, Power Finance Corp, Container Corp, Indian Oil, Oil India, Bharat Electronics and Engineers India.
This year, the Centre may raise another Rs 5,000 crore from the ETF, which is managed by Goldman Sachs Asset Management.
Apart from PSU stake sales, the centre has targeted Rs 28,500 crore to come in from strategic sales in loss-making PSUs or other assets like warehouses, factories, hotels and office buildings which may surplus to the centre's needs. Hence the total disinvestment target for the year is an ambitious Rs 69,500 crore. So far this year, only a five per cent stake in Rural Electrification Corp has been divested for proceeds of about Rs 1,600 crore.
