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Govt mops up $246 mn from Bharat Electronics stake sale

25 February, 2017

The government has raised Rs 1,650 crore ($246 million) by selling a 5% stake in Bharat Electronics Ltd (BEL), inching closer to its disinvestment target for the fiscal year that ends next month.

Retail investors bid for 8.18 million shares against the 2.23 million shares on offer, or 3.66 times, stock exchange data showed at the end of the two-day offer for sale.

The non-retail category, comprising institutions and wealthy individuals, was subscribed 2.75 times with investors bidding for 24.57 million shares against the 8.93 million shares on offer.

The government had put 11.16 million shares, or 5% of its stake in BEL, on offer as part of its disinvestment plans for the current financial year. Following the stake sale, the government’s stake in BEL will fall to 69.41% from 74.41%.

SBI Cap Securities Ltd, ICICI Securities Ltd, Edelweiss Securities Ltd and Deutsche Equities India Pvt. Ltd managed the stake sale.

With the BEL stake sale, the Centre has managed to raise Rs 38,650 crore of the Rs 45,500 crore through disinvestments and allied instruments, such as buybacks and dividends. The original target for this fiscal year was Rs 56,500 crore.

Earlier, it had sold part of its stakes in cigarette maker ITC Ltd and state-run manganese mining company MOIL Ltd, besides selling a minority stake in NHPC Ltd, NBCC Ltd and Hindustan Copper Ltd.

The government had also filed a draft red herring prospectus for its proposed initial public offering (IPO) of HUDCO Ltd in January. Hudco’s share sale will be the first IPO of a state-run company since March 2012, when National Buildings Construction Corporation Ltd floated a public issue worth Rs 125 crore, government data showed.

Finance minister Arun Jaitley has set a record disinvestment target of Rs 72,500 crore for 2017-18, as part of the government’s initiatives to contain fiscal deficit at 3.2% of gross domestic product. It surpasses the Rs 69,500 crore proposed two years ago.

Of the total quantum proposed for the next fiscal, the Centre aims to mop up Rs 46,500 crore from minority stake sales of new listings as well as listed firms. 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.

The Centre has also pitched for listing of shares of state-run railway companies, such as the Indian Railway Catering and Tourism Corporation, Indian Railway Finance Corporation and Ircon International.

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Govt mops up $246 mn from Bharat Electronics stake sale

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