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Govt kicks off FY18 disinvestment process with $200 mn Nalco stake sale

19 April, 2017

The government is selling a stake of up to 10% in state-run National Aluminium Company (Nalco) to raise as much as Rs 1,295 crore ($200 million), as it begins its ambitious asset sale programme for the current financial year to contain the fiscal deficit.

The government will sell 9.67 crore shares, or a 5% stake, in Nalco with an option to offload an equal additional quantity, the company said in a stock-exchange filing. The share sale opened for non-retail investors on Wednesday. Retail investors can bid on Thursday.

The shares will be sold at a floor price of Rs 67 apiece. Nalco shares dropped 6.2% on Wednesday to trade at Rs 68.90 apiece.

Finance minister Arun Jaitley had, in February, set a record disinvestment target of Rs 72,500 crore for the fiscal year that began on 1 April, as part of measures to contain the fiscal deficit at 3.2% of gross domestic product.

Of the total amount, the Centre aims to mop up Rs 46,500 crore from minority stake sales in companies such as Nalco. In addition, the government seeks to receive Rs 15,000 crore from strategic sales and Rs 11,000 crore through listing of state-owned insurance companies.

This exceeded the downwardly revised target of Rs 45,500 crore; the original target was Rs 56,500 crore. The government sold minority stakes in several companies last fiscal year, including cigarette maker ITC Ltd, manganese ore mining company MOIL Ltd, NHPC Ltd, NBCC Ltd and Hindustan Copper Ltd.

This fiscal year, the government intends to initiate share sale in unlisted companies such as general insurance companies, Hindustan Aeronautics Ltd and Airport Authority of India Ltd.

The government is also aiming to launch HUDCO Ltd’s initial public offering after it filed its draft prospectus for regulatory clearance. Hudco’s share sale will be the first IPO of a state-run company since March 2012. And in late March, Cochin Shipyard Ltd filed its draft prospectus for an IPO.

Earlier this week, the Department of Investment and Public Asset Management sought bids from merchant bankers and legal advisors to manage the sale of shares in seven firms including Indian Oil Corp Ltd, NTPC Ltd and Steel Authority of India Ltd. The sales could fetch the government around Rs 34,500 crore.

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Govt kicks off FY18 disinvestment process with $200 mn Nalco stake sale

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