Listed PSUs should interact regularly with investors: DoD

The government has set a target of raising Rs 69,500 cr through disinvestment in current fiscal

Taking a leaf out of private firms, the Department of Disinvestment (DoD) wants listed public sector undertakings (PSUs) to be more proactive in investor contact and keep them updated on company plans so as to facilitate a share sale on short notice to capture market highs.

The DoD has suggested to the Department of Public Enterprises that listed PSUs should be encouraged to organise conference calls with investors, merchant bankers and analysts after quarterly results, an official said.

The practice of holding conference call is followed by several large private sector companies.

“A strategy for investor outreach should be there, investors must know what is happening. If you have educated the retail investors in advance, then you can at short notice get into market with a share sale,” a Finance Ministry official said.

The official said that the Department of Disinvestment (DoD) can facilitate meetings between a PSU and merchant bankers so that company officials can go and meet investors.

"The PSU representatives should attend investor conferences organised by merchant bankers so that awareness among retail participants can grow," the official added.

The official said the DoD has already taken up the issue of reducing the time period between the announcement of an Offer for Sale (OFS) and actual sale.

Sebi had in June allowed companies to disclose OFS plans two banking days prior to the share sale -- a move that has led to most PSU share sales taking place on Mondays as the Department of Disinvestment does not want trading days in-between the announcement and stake sale.

The DoD had asked Sebi to reduce the time gap between announcement and actual sale to T-1, which is one trading day before OFS.

"It should be T-1. Some safeguards should be built to increase retail awareness. We have suggested to Economic Affairs Department to look into it as boxing a PSU stake sale to Monday only is very risky," the official added.

The official recalled that trading is generally weak in stock markets globally on Monday and incidentally domestic markets crashed by over 1,600 points on the day the Indian Oil Corporation (IOC) OFS was launched.

Similarly, the BSE Sensex fell by over 550 points on the day of PFC share sale.

The government has set a target of raising Rs 69,500 crore through disinvestment in current fiscal. So far due to volatile market conditions, only Rs 12,600 crore has been raised through stake sale in four PSUs.