Government's disinvestment process got a fillip with the first such divestment of the current fiscal witnessing over-subscription from both retail and intitutional investors.
The Central Government has successfully divested 9.2% of paid-up capital in National Aluminum Company Ltd (NALCO) to raise Rs. 1,200 crore to begin FY 2017-18 with a bang. Department of Investment and Public Asset Management (DIPAM), Ministry of Finance, has set a record target of realizing Rs 72,500 crore through disinvestment. This follows an all-time high achievement of Rs 46,247 crore during 2016-17, Finance Nibistry has said.
Originally, the disinvestment in NALCO OFS was pegged at 5% of paid-up capital, but seeing the overwhelming response from the market, DIPAM exercised the green shoe option to retain over-subscription and raised the offer to 9.2% on the first day of the sale process. With this transaction, the Government of India shareholding in NALCO has come down to 65.37%.
If the original OFS offer of 5% is considered, the issue is over-subscribed by 2.56 times and if the revised offer of 9.2% is taken, the issue is subscribed 1.43 times. The green shoe option (over-subscription option) was used by the Government for the first time, since the modified OFS procedure spanning 2 days (T and T+1 day) was put in place by SEBI in 2016.
The retail investor continues to back disinvestments of CPSEs by DIPAM. For the fourth time in a row, retail investors out-performed institutional investors. This is particularly satisfying to DIPAM, as one of the objectives of disinvestment policy is to make PSU shareholding broad-based so that nation’s wealth is shared by its citizens.
Encouraged by the successful completion of NALCO OFS, DIPAM is gearing up for a series of disinvestments throughout the year to meet its target.
Government's disinvestment target of Rs 72,500 crore for the current fiscal looks to list three rail PSUs -- IRCON, IRCTC and IRFC and the disinvestment in five GIC companies. Of this Rs 56,500 crore are expected to come from minority stake sale and Rs 15,000 crore from strategic sale. The Government will also rely on the ETF to offload shares.