India plans to accelerate sales of state assets to about one a month and tighten requirements for investment banks competing to arrange the $8.8 billion (Rs 40,480 crore) sell-off, according to the official overseeing the divestment programme.
Investment banks will need to prove their expertise at managing share sales locally and overseas as offering the lowest fee won’t assure them a mandate, Sumit Bose, secretary of the department of disinvestment, said in an interview in New Delhi. Stakes in Steel Authority of India, Engineers India, Coal India, and Hindustan Copper may be sold in the next 12 months, he said.
“We had some cases where the banks bid at zero fees and the department was more than unhappy with that kind of approach,” Bose said.
Prime Minister Manmohan Singh expects to sell more stock than the combined fund-raising by all previous administrations, giving investment banks an incentive to compete for business. UBS AG, Kotak Mahindra Capital Co, and Citigroup Inc will extend their lead as the three biggest arrangers in India this year when state-run NMDC Ltd completes its offering this month.
India is accelerating sales by 60 per cent for the year starting April 1 to tap investors’ appetite for stocks after the benchmark index doubled in the past 12 months. Indian equities may lead emerging-market shares as economic growth accelerates, Templeton Asset Management’s Mark Mobius said March 1.
