India sees stake sale target on track, Oil India in January

NEW DELHI Mon Dec 17, 2012 12:37pm IST

An employee uses an electronic machine to check a rupee note inside a bank in Allahabad December 16, 2011. REUTERS/Jitendra Prakash/Files

An employee uses an electronic machine to check a rupee note inside a bank in Allahabad December 16, 2011.

Credit: Reuters/Jitendra Prakash/Files

Related Topics

Stocks

   

NEW DELHI (Reuters) - India is looking at new ways to attract investors to sales of shares in state-run industries and large offerings in Oil India (OILI.NS) and power company NTPC (NTPC.NS) are set to come in the next few weeks, a top finance ministry official said.

Selling equity in large public industries is a central plank of the government's plan to bring down a wide fiscal deficit, a major weakness in Asia's third-largest economy that has triggered repeated warnings of a credit downgrade from global ratings agencies.

Until last week the government's divestment plan was struggling, but it got a boost from a $1.1 billion offering of miner NMDC Ltd (NMDC.NS). It is on track to meet a budget target of $5.5 billion by the end of March, D. K. Mittal, Secretary, Financial Services and Disinvestment, told the CNBC television network.

Mittal said the Oil India offering will happen in January and will be quickly followed by NTPC by early February.

Investor interest in stake sales was muted last year because of poor market conditions and high pricing, along with restrictions and poor incentives for banks handling the deals that put off foreign players.

The NMDC sale was popular in part because the government set the floor price below book value, which attracted more investors, which could set the tone for the upcoming stake sales.

"We have to have a strategy keeping in mind that the market tends to bring in the price at the lower level," Mittal said. "Pricing is only part of it, there are few more parameters which are a part of the strategy."

He did not give more details, but India's Economic Times newspaper on Monday reported the finance ministry is planning to achieve the target by setting realistic floor prices for share auctions and also providing better incentives to merchant banks, to prod them to go out and aggressively woo investors.

Last financial year, state-run insurer LIC had to bail out the government and buy most of the shares on offer after very low interest for the sale of stock in oil company ONGC (ONGC.NS). Investors said the floor price was too high for market conditions.

HAL OFFER NOT IMMINENT

Last week, Mittal told reporters he was looking at extending the offering time for shares of state-run firms beyond market hours so that more institutional investors from Europe and the United States could participate in the stake sales.

On Saturday, Prime Minister Manmohan Singh said India will speed up the sales to revive the stock market and will push ahead with reforms aimed at spurring an investment recovery in the flagging economy.

The ministry is also looking to offload stakes in Steel Authority of India Ltd (SAIL.NS), NALCO (NALU.NS) and Bharat Heavy Electricals Ltd (BHEL.NS). Mittal gave no timeline on these, but the Economic Times report said they were likely to be part of the renewed push.

However, he ruled out any immediate IPO for state-run aircraft maker Hindustan Aeronautics Ltd, while speaking to CNBC TV-18.

"We do have a few issues to be put through the IPOs but I think we have still not completed the process. And as you are aware, IPOs do take a longer time so I don't expect anything to hit within this financial year," he said.

(Reporting by Arup Roychoudhury; Writing by Frank Jack Daniel; Editing by Muralikumar Anantharaman)

FILED UNDER:
  • Most Popular
  • Most Shared

Insight

REUTERS SHOWCASE

Border Talks

Border Talks

India names Ajit Doval as special envoy for China border talks.  Full Article 

WTO Deal

WTO Deal

U.S. seeks to step up India trade talks  Full Article 

Phone Masts

Phone Masts

American Tower to buy Bharti Nigeria phone masts for $1.1 billion  Full Article 

Infrastructure Plan

Infrastructure Plan

India targets private cash to build railways to its ports.  Full Article 

Shadow Banking

Shadow Banking

Reserve Bank planning more measures for NBFCs.  Full Article 

Auto Sector

Auto Sector

Hyundai Motor, Kia Motors lift 2014 global sales target on China, emerging markets  Full Article 

Oil Prices

Oil Prices

Some fund managers see oil falling to $60 without OPEC cut.  Full Article 

Project Shelved

Project Shelved

Jindal Steel shelves $10 bln project after coal setback.  Full Article 

Market Eye

Market Eye

Sensex, Nifty rise to record after China, ECB stimulus boosts risk appetite.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage