DIPAM set to meet investors to gauge interest in Concor divestment process

Pre-EoI meeting expected to be held this week

To gauge investors’ interest in the divestment process of Container Corporation of India (Concor), the Department of Investment and Public Asset Management (DIPAM) has called for a pre-expression of interest (EoI) roadshow of prospective bidders this week.

Last month, the Union Cabinet cleared a policy that revised the railway land licensing fee. This was followed by a circular on October 4 that clarified the Cabinet decision stating that existing landholders could extend their lease for another 35 years.

Sources said the invitees could include D P World, Adani Group, Vedanta Group, PSA International, Gateway Distriparks, Allcargo Logistics, Port of Singapore, and investment behemoth Canada Pension Plan Investment Board (CPPIB). The government is looking to assess if there are any other concerns regarding the land licensing fee, before floating the EoI.

“One of the major roadblocks for Concor stake sale in 2019 was the land licensing fee. Now, with that issue resolved, DIPAM and transaction advisor Deloitte want to understand the investor interest in the company. It also wants to provide clarity on the land policy to investors,” said a source aware of the development.

Another source said the meeting was expected to be held between October 18 and 21 and representatives of the Ministry of Railways might also be part of it. The meeting will be held via video conference.

“The transaction advisor is arranging some road shows. Now that the land lease policy has been cleared, the EoI is being prepared and should be out soon,” a senior government official told Business Standard.

Pre-EoI roadshows are rare, as most such interactions with prospective investors take place after the EoI is issued. This shows the Centre’s resolve to carry out the deal and engage constructively with potential buyers, said the official, adding that efforts were on to complete Concor’s privatisation this year.

However, realistically speaking, with the EoI not being issued yet, it remains to be seen if the deal can be completed before March 31, 2023. 

The divestment of Concor was cleared in November 2019, through which 30.8 per cent stake in the firm was to be put up for sale to a private firm. The government currently holds a 54.8 per cent stake in Concor. Based on the current market cap of Rs 42,389 crore, a 30.8 per cent stake in the company is valued at around Rs 13,056 crore.

The divestment target for FY23 is Rs 65,000 crore, a much more achievable figure than in previous years, if things go according to plan. So far this year, DIPAM has already garnered Rs 24,543.7 crore through offers for sale, initial public offerings, and share buybacks. This includes Rs 20,516 crore from the IPO of public sector behemoth LIC. The stake sale in IDBI Bank is expected to be completed this year, and even without a premium, the Centre could garner upwards of Rs 13,900 crore from that transaction.