Riding high on today’s success of Maruti Udyog Limited’s public offer—on Day One the share was up 31 per cent over its issue price and the most heavily traded—Disinvestment Minister Arun Shourie plans to duplicate the MUL formula for sale of government’s residual equity in five other companies sold to private firms.The Cabinet Committee on Disinvestment (CCD) will decide tomorrow on Shourie’s proposal to sell the remaining government equity in IPCL, IBP, Videsh Sanchar Nigam Limited, BALCO and CMC Limited through an initial public offer (IPO).The IPO will be through the book-building route, as was in the case of MUL.The government holds about 26 per cent in the five companies which were disinvested through sale of majority share and transfer of management control to private companies.As per the shareholder’s agreement, the current managers of these erstwhile PSUs would get the first right of refusal to acquire the balance shares.However, the Govt expects that these shareholders would decline the offer as they own majority shares and do not gain much by increasing their equity exposure.Shourie’s proposal also seeks CCD approval for appointing advisors for disinvesting the residual share.MUL’s public issue was oversubscribed by 10 times and is the largest capital market transaction in last five years as well as the largest IPO through book-building route. It is also the first IPO through book-building route to be priced over the floor price.
