LIC major buyer in PSU divestment via OFS

OFS has yielded Rs 33,800 crore to exchequer through stake sale in 11 companies since March 2012

State-owned LIC purchased shares worth about Rs 16,400 crore in government's disinvestment programme through the Offer for Sale (OFS) route, accounting for 49% of the money raised by the government through stake sale.

The OFS or auction route has yielded Rs 33,800 crore to the exchequer through stake sale in 11 companies since March 2012, beginning with oil major ONGC.

Country's largest insurer Life Insurance Corporation (LIC) has bought shares worth Rs 16,396 crore in these companies during the auction, according to official data.

The data reveals that with the exception of NTPC and NMDC, the state-run insurer has picked up over 50% of the shares put up by the government for sale.

In case of ONGC, LIC has picked up over 40 crore shares, or 93% of the 42.78 crore shares sold, at a price of Rs 304.25 apiece, including brokerage and STT. It shelled out Rs 12,179 crore for buying ONGC shares.

In case of the NTPC OFS in February 2013, LIC picked up 12 crore shares worth Rs 1,765 crore, of the 78.33 crore shares on the block.

In NMDC disinvestment in December 2012, LIC bought 1.86 crore shares for Rs 278 crore, against 39.65 crore shares issued.

The other major issues such as the Steel Authority of India Ltd (SAIL) and NALCO in March 2013, LIC bought 50% of the shares on block.

While in SAIL it purchased 12.45 crore shares of Rs 24.04 crore, in case of NALCO it bought 7.22 crore shares of Rs 15.69 crore shares offered.

In SAIL and NALCO OFS, LIC's investment stood at Rs 786 crore and Rs 289 crore, respectively.

In case of MMTC share sale in June, LIC bought 4.81 crore shares, of the 9.33 crore shares on offer, thereby investing Rs 289 crore. The total issue size of MMTC was Rs 560 crore.

The other share sales in which LIC purchased majority stakes included Hindustan Copper, Rashtriya Chemicals and Fertilisers Ltd, State Trading Corp (STC) and ITDC.

The government uses the OFS route, popularly known as auction method, to divest its stake in PSUs that come in top 100 companies as per market capitalisation. So far it was divested stake in 11 PSUs through this route.

The government proposes to raise Rs 40,000 crore by way of disinvestment in the current fiscal. So far, it has realised Rs 1,325 crore through stake sale in six PSUs.

In the last fiscal (2012-13), the government has raised Rs 23,920 crore through disinvestment.