The government is determined to push the public issues of listed insurance majors, GIC and New Indian Assurance, this fiscal.
The department of investment and public asset management (Dipam) will appoint merchant bankers for offer for sale (OFS) of shares in the two insurers next month, official sources said.
The move is to augment the current selloff proceeds of Rs 35,000 crore, which is way below the budget target of Rs 80,000 crore.
Under the government’s selloff push, sale of 10 per cent stakes in GIC and New India Assurance is expected to fetch between Rs 9,500 crore and Rs 10,000 crore. At current market prices, the OFS in both the state-run insurers could accrue at least Rs 9,500 crore, the official said.
Markets regulator Securities and Exchange Board of India (Sebi) had mandated a minimum 25 per cent public float for all listed companies. This stipulation was extended to state-owned firms, which were initially given three years to meet the norm. The government currently which holds around 18 per cent stake in both the companies and therefore it will need to divest another 10 per cent each in both.
OFS facilitates promoters of listed companies to dilute/offload their holdings in listed companies in a transparent manner with wider participation through the exchange platform.
Last month, the government has approved share sales in seven central public sector enterprises (CPSEs) to unlock value and raise funds through share sales to meet its disinvestment target. State-owned re-insurer GIC was listed on the bourses in October last year, while New India Assurance made its stock market debut in November last year.
Enterprises approved for listing by the cabinet committee on economic affairs (CCEA) include RailTel Corp India, Telecommunications Consultants India (TCIL), National Seeds Corporation, Water & Power Consultancy Services (Wapcos), Food Corporation of India, Aravali Gypsum and inerals (India) and Tehri Hydro Development. But none of these public issues could materialise this fiscal.
As on January 17, the government has realised Rs 35,134.76 crore as disinvestment proceeds against the budget estimate of Rs 80,000 crore for the current financial year (2018-19).
The third follow-on offer of the CPSE-ETF (exchange traded fund) in November 2018 was the biggest disinvestment transaction, raising Rs 17,000 crore. Earlier this month, the Cabinet approved sale of the government’s entire 52.63 per c ent stake in power sector financier REC to state-run Power Finance Corp (PFC). The government will raise around Rs 14,000 crore from this stake sale.
Dipam secretary Atanu Chakrabarty had earlier expressed confidence that the government would be able to meet its asset sale target. He also said there was substantial interest in state-run helicopter service provider Pawan Hans, in which the government was looking to sell its 51 per cent stake. “Pawan Hans, for which an RFP (request for proposal) has been invited, has got substantial competitive interest,” he had said.