The government has set the ball rolling for divestment of stake in public sector enterprises. UK’s independent merchant banker NM Rothschild & Sons is likely to be the inducted as an advisor to script a detailed roadmap for selling stakes in state-owned companies, according to this report quoting an anonymous finance ministry official.
NM Rothschild is expected to be the first of a string of I-banks which would be part of the advisory panel on disinvestment, which could also include McKinsey, Ernst & Young among others.
NM Rothschild could draw on its strong expertise in advising various governments in Europe and rest of the world in their effort to privatise state owned firms. One of the tony names in the world of I-banking which shot into prominence with its close involvement in the famous privatisation drive in the UK under Margaret Thatcher. It was involved in the multi-billion dollar privatisation programmes of British Gas, British Steel and British Coal, among many others.
Among the key PSEs which are likely to go public in the first round include telecom giant BSNL, aviation major Nacil, Coal India and steel company Rashtriya Ispat Nigam. These are in addition to some names for which the government has already floated the issue process such as OIL and NHPC.
As per the process, the government will invite bids for advisors and lead managers on each public issue, once it is decided which companies will be the first to hit the market. It will also seek consent from the boards of the respective companies.
The government is likely to get bids from I-bankers for becoming the lead managers for the disinvestment candidates by early August, the finance ministry official said in the report.
However, unlike the past the finance ministry is not too keen on setting a target for disinvestment receipts, as the listing of these companies and dilution of stakes will depend on various factors, including prevailing market conditions. In the past the government under the BJP led NDA government often missed yearly targets and came under criticism.
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