Expect PSU selloff every three weeks

Expect PSU selloff every three weeks
Hindustan Times, HT Business, January 19, 2010, Page 25

From the fiscal year beginning in April, expect one share issue from public sector companies every three weeks, as initial public offers (IPOs) of unlisted firms or follow-on public offers (FPOs) of listed ones.

The UPA government is set for a large wave of sell-offs, possibly celebrating the end of five years of coalition constraints that blocked disinvestments before elections last year.

As many as 30 IPOs or FPOs are expected over the next two years –interrupted only by logistical difficulties in managing the cash chasing the shares.

“The market outlook during 2010-11 looks bullish. We should be able to do one issue every three weeks,” Disinvestment Secretary Sunil Mitra told HT.

Subsequently, FPOs of even cash-rich companies such as ONGC, Indian Oil Corporation, Hindustan Petroleum Corporation Limited (HPCL), Bharat Petroleum Corporation Limited (BPCL) and GAIL India could be seen during 2011-12

Last November, the government had decided that the public should hold at least 10 per cent shares in all listed, profitable government-owned companies.

There are 10 listed units where public shareholding is below 10 per cent. They include companies such as National Mineral Development Corporation, MMTC and Neyveli Lignite.

The government has also decided that all unlisted CPSUs that have made profit in the past three years and have a positive net worth (assets greater than liabilities) should get listed on stock exchanges.

About 60 companies qualify for disinvestment under these criteria.

“We would hope to float the issues of Coal India Limited, SAIL and BSNL in 2010-11,” Mitra said.

“We have been in consultations with the CIL and BSNL since August last year,” he said.

Since the UPA government came to office for the second term this May, two public sector companies — NHPC and Oil India — have already listed.

The government has already approved stake sales in power generation companies NTPC Ltd, Satluj Jal Vidyut Nigam (SJVN), Rural Electrification Corporation (REC), NMDC and Engineers India Limited (EIL).

The SAIL Board has cleared a 10 per cent stake sale and is awaiting Cabinet approval.