With the Sensex vaulting by 1300 points to over 31,000 in a month, the primary market is revving up for action. While two government entities — Indian Oil Corporation and State Bank of India (SBI) — are in the process of finalising merchant bankers to raise nearly Rs 20,000 crore from the market, a host of insurers are also gearing up to raise another Rs 20,000 crore in the next a few months.
The Department of Investment and Public Asset Management (DIPAM) has selected five merchant bankers, including Goldman Sachs and Citigroup, Deutsche Equities, SBI Capital Markets and ICICI Securities to manage the government’s 3 per cent stake sale in IOC which could fetch about Rs 6,000 crore to the exchequer. According to sources, Bank of America Corp, Deutsche Bank AG, IIFL Holdings, Kotak Mahindra Bank, JM Financial and SBI Capital Markets are in the race to handle the SBI offering which is expected to raise about Rs 13,000 crore from the market.
The government currently holds 58.28 per cent stake in IOC. At the current market price, a 3 per cent share sale would fetch the exchequer about Rs 6,000 crore. As the market is witnessing a bull run, the IOC is also likely to materialise in the next one or two months. The government had last sold 10 per cent stake in IOC at Rs 387 per share in August 2015 to raised Rs 9,369 crore.
The board of SBI in March approved fundraising of as much as Rs 15,000 crore ($2.3 billion) via various routes including an institutional share sale, rights offering and depositary receipt sale.
The IPO market is heading for a heavy rush with a number of high-profile names including UTI Mutual Fund and SBI Life expected to launch their initial public offers amounting to another Rs 20,000 crore in coming months. Public general insurers New India Assurance and reinsurance firm GIC Re and HDFC Life are among firms which are considering share-sale offers.