Government to buy shares of seven loss making PSUs for Re 1, to meet SEBI norms
The government plans to buy shares of at least seven loss-making PSUs at 1 through a specially-created fund to help these entities meet the Securities and Exchange Board of India's minimum public holding norms.
The government plans to buy shares of at least seven loss-making PSUs at 1 through a specially-created fund to help these entities meet the Securities and Exchange Board of India's minimum public holding norms.
A senior official told ET that the companies will transfer the shares to the extent required for meeting the Sebi norms to the special fund for a notional value of 1.
Sebi recently amended the Securities Contracts (Regulation) Rules, making it mandatory for all listed public sector units to have at least 10% public holding by August 8. The threshold for all other entities was set at 25%.
"The fund will have irrevocable powers to sell these shares as and when it deems fit," the official said. "Talks are on with the market regulator to treat this arrangement under the institutional placement programme," the official said, adding that the fund will be registered as a qualified institutional buyer.
The companies that will transfer shares to this fund include Scooters India, HMT, Hindustan Photofilms, The Fertilisers and Chemicals Travancore Ltd, Andrew Yule, ITI Ltd and State Trading CorporationBSE -0.16 %.
"The arrangement should get the approval of the market regulator within this week, and by August 8 we will have the transfer completed," the official said.
The finance ministry is already in discussions with the concerned administrative ministries to fast track the process.
Sebi chairman UK Sinha said last week that the government has assured that all public sector units will comply with the minimum 10% public holding norm.
"We will not be seeking any exemption," the official quoted earlier said. "The government is hopeful that some of these companies will turn around and, hence, there is no need of a fire sale. At the opportune time, we will divest our stake in these firms," the official added.
The government aims to raise 40,000 crore this fiscal through divestment. It has already raised 828 crore through stake sale in MMTC and Hindustan Copper. The move is in sync with the government's plan to divest 3.56% stake in Neyveli Lignite CorporationBSE 0.51 %. The shares will be sold to Tamil Nadu PSUs through institutional placement programme. The stake sale is expected in the first week of August.
Sebi had earlier this month given its consent to Tamil Nadu's proposal to buy the Centre's entire shares on offer in Neyveli Lignite, provided the acquisition is carried out by a qualified state entity through the IPP route.
Since the IPP mode is allowed only to meet the pubic holding norm of minimum 10%, the department would now sell only 3.56% as against the earlier approval of 5% stake sale.
A senior official told ET that the companies will transfer the shares to the extent required for meeting the Sebi norms to the special fund for a notional value of 1.
Sebi recently amended the Securities Contracts (Regulation) Rules, making it mandatory for all listed public sector units to have at least 10% public holding by August 8. The threshold for all other entities was set at 25%.
"The fund will have irrevocable powers to sell these shares as and when it deems fit," the official said. "Talks are on with the market regulator to treat this arrangement under the institutional placement programme," the official said, adding that the fund will be registered as a qualified institutional buyer.
The companies that will transfer shares to this fund include Scooters India, HMT, Hindustan Photofilms, The Fertilisers and Chemicals Travancore Ltd, Andrew Yule, ITI Ltd and State Trading CorporationBSE -0.16 %.
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The finance ministry is already in discussions with the concerned administrative ministries to fast track the process.
Sebi chairman UK Sinha said last week that the government has assured that all public sector units will comply with the minimum 10% public holding norm.
"We will not be seeking any exemption," the official quoted earlier said. "The government is hopeful that some of these companies will turn around and, hence, there is no need of a fire sale. At the opportune time, we will divest our stake in these firms," the official added.
The government aims to raise 40,000 crore this fiscal through divestment. It has already raised 828 crore through stake sale in MMTC and Hindustan Copper. The move is in sync with the government's plan to divest 3.56% stake in Neyveli Lignite CorporationBSE 0.51 %. The shares will be sold to Tamil Nadu PSUs through institutional placement programme. The stake sale is expected in the first week of August.
Sebi had earlier this month given its consent to Tamil Nadu's proposal to buy the Centre's entire shares on offer in Neyveli Lignite, provided the acquisition is carried out by a qualified state entity through the IPP route.
Since the IPP mode is allowed only to meet the pubic holding norm of minimum 10%, the department would now sell only 3.56% as against the earlier approval of 5% stake sale.
Source : By Dheeraj Tiwari, ET Bureau
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