India’s new government could sell a 5 percent stake in state-run Steel Authority of India Ltd (SAIL), with a final decision expected next week, two sources directly involved in the process told Reuters.
Prime Minister Narendra Modi, who won a landslide election victory last month largely on his promise of economic growth, is expected to speed divestment to bolster revenue generation at a time of weak economic growth.
Former Finance Minister P. Chidambaram had set a target of raising $8.5 billion from share sales in the current fiscal year ending March 31, though that figure is not binding on the new government.
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India’s disinvest department under the Finance Ministry will hold a meeting with Steel Ministry and SAIL officials on June 23 to discuss the sale, a top Steel Ministry official and a top SAIL official said on Tuesday.
A five percent stake in SAIL would fetch more than $330 million based on the company’s current share price of 97 rupees. The stock has risen about 13 percent over the past month against a 4.6 percent rise in the broad Indian stock index.
SAIL sold a stake last year when its stock price was in the range of 65 rupees.
“When is a right time to sale? Today it is better than what it was last year,” the Steel Ministry official said.
A SAIL official said the proposed stake sale would also help it comply with Indian stock market rules requiring that publicly listed companies have an equity free float of at least 25 percent.
Both the officials declined to be named as the discussion is private. A SAIL spokesman could not be reached for comment.
Some advisers to Modi and Finance Minister Arun Jaitley have suggested loosening the purse strings to quickly stimulate the economy. Others favour slashing the deficit to 3.8 percent of GDP this fiscal year, even faster than the 4.1 percent goal in the last budget. ($1 = 59.7000 Indian Rupees)