Even as the investors are waiting for the Rs 30,000 crore disinvestment programme to begin, the government has told intermediaries that share sales in two resources firms will be completed in November, followed by another two in December. These will follow the initial public offering of the RINL (Rashtriya Ispat Nigam Ltd) expected to hit the Street later this month.
According to request for proposals(RFP) floated by the divestment department, the 10% stake sale in NMDC Ltd, expected to rake in around Rs 7,675 crore at current prices “is proposed to be completed in November 2012.”
Similarly, the department has told in RFPs for legal advisers that Nalco sales, which is expected to rake in around Rs 1,650 crore for 12.5% stake, is also proposed to be finished next month.
Oil India, which is likely to fetch around Rs 2,880 crore as of Monday’s prices is scheduled for December alongwith Neyveli Lignite Corp, whose 5% will bring in another Rs 750 crore.
The timeline is given to the legal advisers to assess the ability of the advisers to commit enough resources for the government job at such short notice. The legal advisers are required to “Demonstrate ability to deliver in accordance with the timetable requirement and the ability to commit key personnel for the entire duration of the transaction.” This portion will account for 10 marks out of 100 in the technical bidding process for the selection of the advisers.
In addition, the government is also looking to offload stakes in MMTC. But it is yet to give any indicative timeline for this sale.
These five divestments( other than RINL Ipo) will happen through the offer for sale on the stock exchanges ( OFS) mechanism, which ensures a quick sale and efficient sales.
| DIVESTMENT ROADMAP | |||
| Company | Stake to be sold (%) | Expected proceeds (Rs crore) at current market prices | Indicative Timeline |
| RINL | 10 | 2500* | October 2012 |
| NMDC | 10 | 7675 | November 2012 |
| Nalco | 12.5 | 1650 | November 2012 |
| Neyveli Lignite | 5 | 750 | December 2012 |
| Oil India | 10 | 2880 | December 2012 |
| MMTC | 10 | 7100 | --- |
| * - RINL is an initial public offer proceeds based on market estimates | |||
| Source: diverst.nic.in, BSE | |||
Thus, the government is planning to achieve close to a half of its target by the end of 2012. A significant portion of this is expected to be completed before Diwali, cashing in on the positive market sentiments driven by copious fund flows from foreign institutional investors.
Government had completed the mammoth Rs 15,000 crore share sale of Coal India in 2010 just ahead of Diwali. This year the festival of lights falls on November 13.
Market participants are bullish about the government stake sale programme. The NMDC sale has received a good response from the merchant bankers as 16 top bankers have queued for the sale. Top bankers, both domestic and foreign, are vying for the mandate. Goldman Sachs, Morgan Stanley, DSP Merrill Lynch, Kotak,Citi, SBI Caps, Enam and ICICI Securities are among the i-banks scheduled to make presentations to the ministry on Wednesday.
