The government will kick off its Rs 58,000-crore disinvestment programme for 2014-15 today, with dilution of a 5% stake in Steel Authority of India Ltd (SAIL).
The floor price for disinvestment in SAIL will be set at Rs 83 a share, slightly lower than its closing price of Rs 83.35 on the BSE on Thursday, according to an exchange filing.
If shares are sold at Rs 83 a piece, the government will be able to mop Rs 1,714 crore. However, the official said there would be a five per cent discount for retail investors. A little over Rs 160 crore worth of shares will be reserved for retail investors.
The new norms issued by the Securities and Exchange Board of India (Sebi) earlier this week, to allow retail investors to apply at the cut-off price, will not be applicable for the SAIL offering, said a banker handling the issue. Investors participating in the offer-for-sale (OFS) will have to bid above Rs 83 per share. The allotment will happen on a price priority basis. Which means investors who bid higher will get the allotment. In case of oversubscription, allotment will be made on a time priority basis if the bidding price is the same.
Following the stake sale, the government holding in SAIL will come down from 80 per cent to 75 per cent.
Brokers said a lot of investors have built short positions in SAIL in the derivatives segment to cash in on arbitrage opportunities. These investors will benefit if they are able to buy shares of SAIL in the OFS at below their shorting price. Shares of SAIL have corrected more than 5 per cent in the previous two trading sessions on selling pressure ahead of the share sale. Volumes in the SAIL counter in the cash and derivatives segment remained high on Thursday. The stock was also actively traded in the stock lending and borrowing (SLB) counter.
The government will start its disinvestment programme by diluting its stake by five per cent in SAIL on Friday through OFS. Shares of SAIL fell 0.35 per cent to close at Rs 85.35 on BSE.
The Centre plans to raise Rs 36,925 crore by selling its stake in 10 public sector undertakings, including behemoths Oil and Natural Gas Corpatiion (ONGC), Coal India and NHPC, and smaller firms like Power Finance Corporation (PFC), Rural Electrification Corporation (REC) and Container Corporation of India (Concor).
Additionally, it plans to raise about Rs 6,500 crore from part-sale of the stake it holds through Specified Undertaking of Unit Trust of India (Suuti) in Axis Bank, Larsen & Toubro, and ITC; and Rs 15,000 crore from sale of its residual stake in Hindustan Zinc and Bharat Aluminium Company (Balco).
Apart from SAIL, finance ministry officials are confident that Coal India, ONGC, and NHPC will hit the market by the end of January. At current prices, the combined proceeds from these four public sector behemoths will be around Rs 42,911 crore.
So far, however, there is less clarity on stake sales in the smaller companies, some of which might be shelved. The combined proceeds from sale of five per cent each in Concor, PFC, REC and MOIL could be about Rs 5,210 crore at current rates, while the government expects about Rs 5,500 crore from sale of 10 per cent each in Hindustan Aeronautics and Rashtriya Ispat Nigam.
Finance Minister Arun Jaitley has set a tight fiscal deficit target of 4.1 per cent of gross domestic product, so every rupee counts.
The tax authorities have to raise Rs 6.54 lakh crore in the second half of 2014-15 — 28 per cent more than what they did in the period from October 2013 to March 2014 — to meet the full-year target of Rs 9.77 lakh-crore. So, it is imperative that the targets from disinvestment, spectrum sales, and special dividends are met.
The floor price for disinvestment in SAIL will be set at Rs 83 a share, slightly lower than its closing price of Rs 83.35 on the BSE on Thursday, according to an exchange filing.
If shares are sold at Rs 83 a piece, the government will be able to mop Rs 1,714 crore. However, the official said there would be a five per cent discount for retail investors. A little over Rs 160 crore worth of shares will be reserved for retail investors.
The new norms issued by the Securities and Exchange Board of India (Sebi) earlier this week, to allow retail investors to apply at the cut-off price, will not be applicable for the SAIL offering, said a banker handling the issue. Investors participating in the offer-for-sale (OFS) will have to bid above Rs 83 per share. The allotment will happen on a price priority basis. Which means investors who bid higher will get the allotment. In case of oversubscription, allotment will be made on a time priority basis if the bidding price is the same.
Brokers said a lot of investors have built short positions in SAIL in the derivatives segment to cash in on arbitrage opportunities. These investors will benefit if they are able to buy shares of SAIL in the OFS at below their shorting price. Shares of SAIL have corrected more than 5 per cent in the previous two trading sessions on selling pressure ahead of the share sale. Volumes in the SAIL counter in the cash and derivatives segment remained high on Thursday. The stock was also actively traded in the stock lending and borrowing (SLB) counter.
The government will start its disinvestment programme by diluting its stake by five per cent in SAIL on Friday through OFS. Shares of SAIL fell 0.35 per cent to close at Rs 85.35 on BSE.
The Centre plans to raise Rs 36,925 crore by selling its stake in 10 public sector undertakings, including behemoths Oil and Natural Gas Corpatiion (ONGC), Coal India and NHPC, and smaller firms like Power Finance Corporation (PFC), Rural Electrification Corporation (REC) and Container Corporation of India (Concor).
Additionally, it plans to raise about Rs 6,500 crore from part-sale of the stake it holds through Specified Undertaking of Unit Trust of India (Suuti) in Axis Bank, Larsen & Toubro, and ITC; and Rs 15,000 crore from sale of its residual stake in Hindustan Zinc and Bharat Aluminium Company (Balco).
Apart from SAIL, finance ministry officials are confident that Coal India, ONGC, and NHPC will hit the market by the end of January. At current prices, the combined proceeds from these four public sector behemoths will be around Rs 42,911 crore.
So far, however, there is less clarity on stake sales in the smaller companies, some of which might be shelved. The combined proceeds from sale of five per cent each in Concor, PFC, REC and MOIL could be about Rs 5,210 crore at current rates, while the government expects about Rs 5,500 crore from sale of 10 per cent each in Hindustan Aeronautics and Rashtriya Ispat Nigam.
Finance Minister Arun Jaitley has set a tight fiscal deficit target of 4.1 per cent of gross domestic product, so every rupee counts.
The tax authorities have to raise Rs 6.54 lakh crore in the second half of 2014-15 — 28 per cent more than what they did in the period from October 2013 to March 2014 — to meet the full-year target of Rs 9.77 lakh-crore. So, it is imperative that the targets from disinvestment, spectrum sales, and special dividends are met.
(Source - Business Standard, Dec 5, 2014)
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