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Journalism of Courage
When it comes to transparency and fair play, government companies and regulators are supposed to lead from the front. But it seems the reverse is happening. It is understood that the market regulator the Securities and Exchange Board of India (Sebi) has allowed Public Sector Undertakings (PSUs) like ONGC and GAIL to come out with public offers with a different set of rules than those that are applicable to others in the market. India has public sector companies, who demand, and get, special status and concessions. The rest must follow more stringent norms. Are PSUs less prone to manipulations than private sector companies. History will probably say the reverse.
Anyhow, primary market experts like Prithvi Haldea say the public offers of government companies are not initial public offerings (IPOs) since they are already listed on the exchanges. But PSUs want their offerings to be treated as IPOs. Other demands of PSUs include: announcement of price band and floor price only a day before the launching of the issue, broader price band limits and flexibility in minimum allotment. Facilities that are unavailable to the rest of the market.
The regulator has apparently allowed these companies to get away with most of these concessions. Tomorrow, if the private promoters also demand the same privileges, will the regulator give in? Should the government and the regulator throw established norms to wind just to facilitate the mega issues of PSUs? Maybe meeting the disinvestments target and it being an election year has something to do with this decision. Ideally, the Sebi should have put its foot down and asked the government companies to follow the rules. But it didn’t. Maybe it has other ideas. “Sebi will do only what’s good for the market and investors,” a top Sebi official told us.
It is good for the government since the money raised from the PSU divestment will go to the government kitty. But is this good for the market? The question lingers: why is the government bending rules to meet the divestment target. If Sebi wants to facilitate the government in its disinvestments process, should it not change the norms for all. There certainly should not be any selective pampering.
