On Monday, when the initial public offering (IPO) of Larsen & Toubro’s subsidiary L&T Infotech hit the markets, the executive chairman of the parent was all over the front pages of business papers. Smart investors waking up to Business Standard would have found a smiling A M Naik on the front page panel saying “L&T Infotech to grow with the sector”. On front page of The Economic Times, he was looking into the distance saying “L&T Infotech will focus on specialisation”. The Mint quoted the 74-year-old predicting the IPO will excite employees and put them under pressure.
Not just these. Last week, Naik was out allaying concerns over top-level attrition. The veteran seems to understand the psychology of investors as good as anybody else. It was a Rs 1,200-crore issue. Any of his battle-hardened lieutenants could have probably carried it home. But, Naik decided to put his weight behind it and did not leave things to chance. The Street likes a familiar face.
Another entity to which Naik is indirectly connected to and planning a share sale can take a leaf out of his book. Specified Undertaking of Unit Trust of India (Suuti), which is a large shareholder in L&T, plans a sale that would be 50 times of the Infotech IPO. Suuti has called for request for proposals (RFP) from merchant bankers to help it sell holding spread across some 51 companies.
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Suuti holdings that have been put on sale include several unlisted firms. In some of these, Suuti owns a controlling stake and significant minority in others. For example, it has a 15.58 per cent stake in the country’s premier depository NSDL. Just appointing bankers would not be enough to realise the full value of these holdings.
Suuti needs a public face that can articulate what it wants to do. At present, people running it are too media-shy. Not a great quality to have when you have truckloads of shares to sell. The potential investors and other stakeholders need to know who they are buying the shares from, the history of these shares; they would like to understand the strategic importance of these holdings, experiences on the board of investee companies, the internal processes and dilemmas.
The Suuti RFP mentions a mid-level executive as the contact point for the interested bankers. The selected bankers are going to arrange road shows, meets with investors and attract retail participation, too. Who will the investors meet? The ministers or ministry officials?
The ministers may not be able to provide the time and details investors are looking for. In the past three years, there have been four people who have headed the rechristened DIPAM department, which manages government share sales. Not one has managed a full year of disinvestment. Can a three-year process of such high value and importance be left to the mercy of such bureaucratic musical chair? What message would it send to investors? Wouldn’t the lack of continuity drive them away?
K N Prithviraj, the last appointed Administrator of the Suuti, is well-qualified to be the face of the Rs 60,000 crore sale. Latest documents on the Suuti website state he is one of the three advisory board members. He has 38 years of experience in the banking industry and has served as the chairman and managing director of Oriental Bank of commerce. He is on the board of several companies such as Can Fin Homes, PNB Investment Services, Dwarika Sugar, etc. He needs to be given a clear and firm mandate. An e-mail sent to the official email-id of the administrator on the sales strategy did not elicit any immediate response.
The big question, though, is if the government wants to stick its neck out and put up a brave face.