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The government has scrapped the process of appointing bankers to manage stake sales in five state-owned companies, including India's largest iron ore producer NMDC, owing to poor response.
SBI Capital Markets, ICICI Securities and Yes Bank were the only three that expressed interest in managing sale of the group of five companies in the 'Basket One', which also included Oil India (OIL), MMTC, Container Corporation of India (Concor) and India Tourism Development Corp (ITDC).
There was no foreign banker who bid for this batch.
"The Disinvestment Department was not happy with the response from the merchant bankers and hence, scrapped it," a source said.
The Department of Disinvestment (DoD) had initially decided to appoint four merchant bankers for the group or basket. However, only three had bid for it.
The government plans to sell 10 per cent stake each in OIL and NMDC, 5 per cent in Concor, 15 per cent in MMTC and 12.03 per cent in ITDC.
“The department would again invite applications from merchant bankers for managing the stake sale,” the source added.
The merchant bankers, handling the basket of public sector undertakings, were to be appointed for three years.
At the current market prices, the stake sale in the five companies in Basket One could fetch over Rs 9,000 crore.
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The source said the government has appointed Deutsche Bank, ICICI Securities, SBI Capital Markets and Edelweiss Financial Services to man-age sale of companies in Basket Two, which includes the largest power producer, NTPC.
Kotak Mahindra Bank, JM Financial and Yes Bank had also pitched for the mandate for Basket Two, which also includes NALCO, Bharat Electronics (BEL), Engineers India (EIL) and Hindustan Copper (HCL).
The government intends to sell 5 per cent stake each in NTPC and BEL and 10 per cent each in EIL and NALCO. It plans to sell 15 per cent of its stake in HCL.
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Another source said DoD had decided to bundle the PSUs as it does not want the merchant bankers to pick and choose companies for disinvestment.
Besides, the bundling would also reduce the number of roadshows to be conducted by the merchant bankers as that too can be clubbed.
The government is targeting to raise Rs 69,500 crore from disinvestment in the current fiscal. So far, due to volatile market conditions, it has been able to sell stakes only in two PSUs to raise over Rs 3,000 crore.
