Government To List 10 State-Owned Entities In FY20

The government will list 10 public sector companies on the stock exchanges in the ongoing financial year after it redefined its holding structure in state-run entities, a secretary in the disinvestment department said.

Divesting shareholding in state-run entities through listing on the bourses is one of the ways the government can meet its divestment target of Rs 1.05 lakh crore for the current financial year.

The government has already invited book-running lead managers for divesting its 25 percent stake each in RailTel Corporation of India Ltd. and Tehri Hydro Development Corporation Ltd. through an initial public offering.

Redefined Equity Holding Structure

The new holding structure in state-run entities will bring more investments, Department of Investment and Public Asset Management Secretary Atanu Chakraborty said at an industry interaction organised by Confederation of Indian Industry in Delhi on Friday. “Ownership and control have been separated,” he said.

In Budget 2019-20, the government proposed to consider reducing its share in some companies where it still wants to hold a controlling stake, below 51 percent on a case-to-case basis. The government has also decided to modify the existing policy of retaining 51 percent government stake to retaining 51 percent stake inclusive of the stake of state-run institutions.

Larger float was also needed for international investors, and to be in sync with global indices which give a lot of weightage to floating shares, Chakraborty said. And CPSEs did not have enough float in the market, therefore the government, in some cases, wants to cut its stake below 51 percent, he said.

The government has decided to go ahead with strategic divestment in about 14 small- and mid-sized companies, which is already in the process, and some larger state-owned firms will be put on the block as well, he said.

All government-owned companies will meet the minimum public shareholding norm which are currently at about 14, and will be governed by the same norms which govern any other company.

As on March 31, 2019, the government held more than 75 percent in 18 listed companies on the National Stock Exchange, according to data on NSE Infobase.

The government has already started the process to cut its stake in state-owned entities to meet minimum public shareholding norms as mandated by the Securities and Exchange Board of India.

Department of Investment and Public Asset Management on Friday floated a request for proposal to divest 16 percent in Ircon Ltd. through an offer for sale. The government currently holds a little over 89 percent in the company.