Market regulator Sebis recent move to tweak the norms governing the controversial offer-for-sale (OFS) model has boosted the finance ministrys confidence to deploy the format for upcoming stake sales in public sector firms,the ONGC issue debacle notwithstanding.
The department of disinvestment is planning to divest stakes in as many as four PSUs using the auction route this fiscal. These include heavyweights such as Hindustan Copper Ltd,Steel Authority of India Ltd,Bharat Heavy Electricals Ltd and Oil India Ltd. Given the volatility in equity markets,the OFS route would be a good bet. The changes in OFS norms by Sebi last month has not only fixed the glitches in the method but will also help provide greater flexibility, disinvestment secretary Mohammad Haleem Khan told The Indian Express.
At its board meeting on June 27,Sebi tweaked norms governing offer-for-sale (OFS) and institutional placement programme (IPP). It has cut down the earlier requirement of a 12-week time gap between two OFS or IPP to a mere two weeks in order to help firms offload shares in tranches. Further,the market regulator also said that the indicative price would be displayed during the last one hour of the close of bidding session irrespective of the book being built.
The disinvestment secretary however ruled out using the IPP route at present. The paper work required in IPP is almost the same as public offers. So we will prefer divestment through public offers or OFS method at present,as we have already used them before, he said.
The government has set a target of Rs 30,000 crore from disinvestment of Central public sector undertakings in the current fiscal but has been unable to launch any public offer due to choppy markets. It plans to divest up to 5 per cent stake in BHEL,SAIL and OIL each,and up to 10 per cent of its equity in HCL.
Last week,HCL had indicated that the government could divest stake in it through the OFS or auction route. The disinvestment is likely to be done through the auction route,though there has to be final view, companys CMD Shakeel Ahmad had said.
The government had for the first time used the auction route for divesting 5 per cent stake in state owned ONGC Ltd in February this year. But it came under fire for the way it handled the share sale that had to be finally rescued by the Life Insurance Corporation of India. The auction was also marred by technical glitches,where the exchanges failed to provide information on the indicative price.