The finance ministry on Monday said that majority of the investment in government’s stake sale in public sector units during 2012-13 came from foreign institutional investors (FIIs) and that Life Insurance Corporation (LIC) is not salvaging the disinvestment programme.
According to a statement issued by the ministry, during 2012-13, the government divested stake in seven PSUs through the offer-for-sale (OFS) route and raised about Rs 23,830 crore. “39 per cent of this amount came from FIIs. Only about 25 per cent came from insurance companies including LIC and less than 10 per cent from banks including public sector banks,” the statement said.
The government raised Rs 22,087 crore from four big issues — Oil India, NMDC, NTPC and SAIL — and, of this, 42 per cent was invested by the FIIs, 22 per cent by insurance companies and less than 9 per cent by banks.
Market experts said that though every disinvestment issue should be taken on case-to-case basis, the government’s clarification has come, essentially, to prepare the market for the fresh wave of sell-offs it is planning for the current fiscal. Not only the government has to meet its disinvestment target of Rs 40,000 crore in 2013-14, it also has to ensure the minimum 10 per cent public shareholding norm and the markets have to be prepared for these targets, experts said.
“The government, while deciding the pricing of a particular offering, take into consideration factors like the strength of the company, market conditions, investor interest, and participation of all categories of investors, etc.; and fix a very reasonable level of price. Given the inherent strength of the government companies, long-term investors’ participation is good in government issues,” the statement said.