The government on Thursday picked five merchant bankers to arrange a secondary market sale of shares of Indian Oil Corporation (IOCL).
It appointed Citigroup, Deutsche Bank, Goldman Sachs, SBI Capital Markets and ICICI Securities for a 3% stake dilution via an offer for sale (OFS) in India’s largest oil marketing and distribution company. The stake sale is expected to happen in the second quarter of this financial year.
The government aims to sell 145.67 million shares, which at current rates may fetch the central exchequer Rs 6,526. 33 crore ($1.01 billion).
The stake sale, which is part of the disinvestment target for financial year 2017-18, will trim the government’s holding in IOCL to 54.34% compared with 57.34% stake held at the end of March 2017, stock exchange data showed.
In this year’s Budget speech, finance minister Arun Jaitley laid out a record disinvestment target to contain the fiscal deficit at 3.2% of gross domestic product. The finance minister proposed to raise Rs 72,500 crore through capital receipts that comprise minority sales, strategic disinvestments as well as through listing of state-owned insurance companies. This surpasses the previous record of Rs 69,500 crore proposed two years ago.
The Cabinet last month approved sale of shares in 12 state-run companies through public offerings. The dilution would be as high as 25% in some of the companies that include railway public sector undertakings (PSUs) Indian Railway Finance Corp (IRFC), Indian Railway Catering and Tourism Corporation Ltd (IRCTC) and Ircon International as well as state-owned insurers National India Assurance (NIA) and General Insurance Corp (GIC) of India.
Earlier this month, the government off-loaded a 10% stake in state-owned housing financier Housing and Urban Development Corp (Hudco) for Rs 1,224 crore.
Last month, the government raised roughly Rs 2,00 crore from stake sale in aluminium company Nalco Ltd.
The Department of Investment and Public Asset Management (DIPAM), which handles the government’s plan of divesting stake in PSUs, has floated requests for proposal for stake sale in hydro-power firm NHPC, Power Finance Corporation (PFC), REC and NLC India Ltd.
Last year, the government raised Rs 34,938.68 from minority sale in PSUs. It had budgeted Rs 36,000 crore from minority share sales and Rs 20,500 crore via strategic stake sales, which was revised lower to Rs 10,500 crore.