The Securities and Exchange Board of India (SEBI) and the government are looking at various options to work around the challenges the Centres faces to offload its stakes in public sector companies to meet the August 2017, reported Business Standard.
The Securities and Exchange Board of India (SEBI) and the government are looking at various options to work around the challenges the Centres faces in offloading its stakes in public sector companies to meet regulations, reported Business Standard.
Currently, the government holds more than 75 percent stake in 20 public sector undertakings (PSUs), which need to be brought below 75 percent to meet the SEBI guideline of minimum 25 percent public shareholding. Source told the newspaper that the Finance Ministry’s Department of Investment and Public Asset Management (DIPAM) has not asked SEBI to extend the deadline.
One of the options includes reviving special national investment funds (SNIFs), which the Centre had used for certain loss-making PSUs in 2013.
The government can put the PSU stakes it needed to divest into an SNIF run by independent market experts. This stake is considered divested by SEBI. SNIF can later sell the PSU stakes.
Talks have been held between DIPAM and SEBI on meeting the August deadline and further talks are likely to continue.
The PSUs in which the Centre hold more than 75 percent are Coal India (79.8 percent), NLC India Ltd (89.3 percent), SJVN (90 percent), Central Bank of India (81.3 percent), State Trading Corp (90 percent), Andrew Yule (89.3 percent) and ITI (94.9 percent).
The Centre is looking to completely exit from loss-making PSUs as part of strategic sale road map.
The Centre’s problem is compounded by the fact that it plans to list a number of companies on the stock exchange this year while having to comply with the minimum 25 percent public shareholding norms.
It has already announced in the Budget to list rail PSUs like IRCTC, IRCON and IRFC, along with the five insurance companies — New India Assurance, United India Insurance, Oriental Insurance, National Insurance and General Insurance Corporation of India.
The government has set a total divestment target for 2017-18 is Rs 72,500 crore, its highest ever. It is expected to raise Rs 46,500 crore from minority stake sales, buyback, initial public offerings, employee offer for sale and CPSE exchange-traded fund route.The Centre hopes to garner about Rs 15,000 crore from strategic sale in PSUs and about Rs 11,000 crore is expected to come from insurance IPOs.