PSUs exempted from 25 pct float norm

Govt has exempted PSUs from new rules requiring to have a public float of at least 25.

The government has exempted state-owned firms from new rules requiring companies to have a public float of at least 25 per cent,following two major share sales from government-owned firms earlier in the year that drew tepid responses.

The regulations,set out by the government in June,requires listed companies with a free float of less than 25 per cent to increase it by a minimum of 5 per cent a year.

They were expected to force 10s of billions of dollars in share sales and prompt new issues.

However,the government said on Monday state-run listed firms would be exempt from floating a minimum of 25 per cent on stock exchanges without saying the reason for its decision.

Analysts had said the rules put pressure on the government in its programme to cut its holdings in 60 state firms over the next few years. It plans to raise 8.6 billion through stake sales in the fiscal year to March 2011.

Already shares sales from state-run NTPC,India8217;s No.1 power producer,in February,and NMDC,the country8217;s top iron-ore miner,in March failed to receive significant interest from foreign investors. They were covered only after state-run financial groups pitched in with big orders.

The government still owns 84.5 per cent of NTPC,and 90 per cent of NMDC,stock exchange data showed.

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In 2009,the government said unlisted state firms making a profit in the past three consecutive years should list and all profitable,listed state firms must have at least 10 per cent of their shares in public hands.

State-run Coal India,the world8217;s largest coal miner,will file a draft prospectus this week for an initial public offering to raise as much as 3 billion,three sources with direct knowledge of the matter said on Friday.

Other government share sales in the pipeline this fiscal year include public offerings in Steel Authority of India Ltd,Hindustan Copper and Power Grid.

The regulation on public floats could force companies in India to raise a total of as much as 60 billion in stake sales over the next few years,according to an estimate by Prithvi Haldea,chairman and managing director of Prime Database,said in June when the new rules were set out.

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Indian companies raised about 20 billion in equity last year in a market that rose about 80 per cent. The benchmark index is up 4.7 per cent this year.

Among companies in the 30-share benchmark BSE index,realty firm DLF and software services firm Wipro have a public float of less than 25 per cent,according to Bombay Stock Exchange data.

Earlier this year,investment bankers forecast that India could see equity issuance of roughly 30 billion in 2010,but poor markets have led some companies to defer their plans.